U.S dollar index long-term technical analysis

The year 2020 has ended and the U.S dollar index direction seems to have changed from bullish to bearish. The index opened the year at 96.54 and reached as high as 102.99 before turned lower and closed at 89.93. This year, the index might continue its bearish movement and more stimulus introduced to bolster the economy as the coronavirus pandemic has not ended yet.

New Month

Monthly chart

The bearish pressure on the U.S dollar index has not receded yet. Last month, the index extended its bearish movement and closed lower. It seems the bearish pressure might continue this month and target the 2018 low at 88.25. Traders might want to avoid long positions for now until there is a major bullish close on the monthly chart.

Weekly chart

The same as the monthly chart, the U.S dollar index continues moving lower smoothly and soon will reach the 88.80 and 88.25 support levels. There is nothing traders could do aside from holding short positions in the U.S dollar or waiting for a strong bounce reaction. Short positions in the U.S dollar could be considered when the index makes a bullish correction toward the 92.00 – 93.00 area.

Daily chart

The outlook continues to be bearish for the U.S dollar index. There is no change to the situation yet for now. It is better to avoid taking long positions in the U.S dollar at least until the major support 88.80 and 88.25 were tested. Traders could use the two bearish trendlines as a reference level to gauge the current bearish trend.

Trade plan (For U.S dollar pair)

There is no reason for traders to take long positions in the U.S dollar yet. The index continues moving lower with moderate bearish momentum. As long as the index keeps making a lower low and lower high, traders will continue to hold short positions in the U.S dollar.

The 88.80 and 88.25 support level might become temporary bullish reversal level before further downside.