Hi Traders! US Dollar Index short term forecast and technical analysis is here. The way I would like to analyze the chart for setups is based on multi-timeframe confirmations because in my POV if we get more evidences on different timeframes for the same direction then it makes the setup much more reliable. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club Spoiler alert – free memberships are available! Let’s start our analysis from the highest timeframe which will be the H4 chart here.
On the H4 chart, the price which was moving lower reached a key support zone that has formed based on the 161.8%(100.865) Fibonacci expansion level of the first wave and the 61.8%(100.831) Fibonacci expansion level of the second wave. The price respected this key support zone and has currently bounced higher from this zone. In addition to this, we could see that the price which was moving lower created a bullish divergence that has formed between the first low that has formed at 101.501 and the second low that has formed at 101.090 based on the MACD indicator. The price then moved higher and broke above the last high at 102.274 creating higher highs, thus forming a classical setup of bullish divergence followed by bullish convergence. Hence as per the book scenario, after a bullish convergence, we may look for corrections to happen and then further continuation to the upside. So everything looks good here for the bulls and we may now move down to one timeframe lower and look for evidences supporting this short term bullish view.
On the H1 chart, we could see that the price which was moving higher has created higher highs based on the MACD indicator, which is a sign of gaining momentum towards the bullish side. Currently, it looks like a pullback is happening with the price creating a bullish hidden divergence that has formed between the first low that has formed at 101.491 and the second low that has formed at 101.965 based on the MACD indicator which we may consider as another evidence of bullish pressure. Also, based on the Stochastic Oscillator we could see that the price has reached its extreme which we may consider as yet another evidence favoring this short term bullish view. So based on all this, until the key support zone shown in the image below (marked in blue) holds my short term view remains bullish here and I expect the price to move higher further.
US Dollar Index H4(4 Hours) Chart Analysis
US Dollar Index H1(1 Hour) Chart Analysis
It is always recommended to look for confirmations before you jump into any trade. If you are not sure about how to trade this short term buy setup then you can use any setup and strategy that you have in your arsenal to look for bullish moves and join this buy trade.
Also, don’t forget to protect your buy trade using a stop loss and make sure to set a target and keep a proper risk/reward ratio.
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Happy Trading!
Arvinth Akash
Traders Academy Club Team
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