U.S dollar index long-term technical analysis
This year has been rough as coronavirus continues to spread globally. U.S elections also provide traders with a lot of uncertainties. However, the uncertainties have been lifted this month as Joe Biden won the election. Moreover, Trump also has allowed the transition of his administration to Biden.
On the coronavirus ground, more companies reported their vaccine trial result. The result is encouraging and it lifted the market. Under the current positive sentiment, the U.S dollar index traded lower. Economic recovery is expected to kick-off when the vaccine is distributed worldwide.
Judging from the situation, it seems the U.S dollar index will continue trade under pressure and traders might want to avoid long positions for now.
U.S dollar index is in a major bearish trend after the breakout from the bearish channel. We have mentioned in the July analysis where the index made official close below the channel. The bearish movement has reached the 92.00 support level or the orange area. Overall, traders could see the index ranging between 92.00 – 94.00 or the orange and green box area.
This month, there is major bearish pressure which might lead the index to close below 92.00. A close below 92.00 will become bearish confirmation toward the 88.80 support level.
The high gets lower on the weekly chart and the index on the verge of breaking-out below 92.00. If the index makes a bounce then 93.00 might become the next lower high. At the current time, traders might want to wait for an actual bearish breakout to happen and continue holding short positions.
The overall trend of the U.S dollar index is ranging inside the yellow box area since July. The index made a failed attempt breakout above the range. As long as there is no breakout, the index will continue its ranging movement. We think the pressure is to the downside and a breakout might happen soon.
Trade plan (For U.S dollar pair)
Traders who have short positions in the U.S dollar could continue to hold the positions as the index on the verge of a bearish breakout. At the current time, the key level for a breakout is 92.00. Without breakout, the index will continue ranging between 92.00 – 94.00.