US Dollar Index Long-Term Technical Analysis | October 2020

US Dollar Index Long-Term Technical Analysis

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The US election is not far, and the market seems to be deleveraging on US dollar shorts. Last month, there was a shift in the sentiment, which might give a breather for the bull. However, the current situation could change drastically nearing or after 2020 presidential election in November.

Put simply, traders might want to stay careful this month and trade for short-term while waiting for the market reaction later.

New Month

Monthly chart

The US Dollar Index not looking back since the breakout below the bullish channel. The index has moved lower from 100.00 toward 92.00 in just four months. Last month, the index managed to eke a gain and closed the month above August’s opening level (though below the August high).

This month, the index is expected to challenge the 94.00 – 94.30 resistance area which limits the index upward movement. If the index could close above 94.00 then traders could expect the start of short-term bullish bounce to target 95.00 and 96.10.

Weekly chart

We have a major bullish launch above 94.00 – 94.30 two weeks ago. However, the index started to move lower again last week and closed below the area. This week, the US Dollar Index is attempting to build bullish pressure to return above the area. If the index could not return above the area and closed below 92.60 then traders will prepare for bearish continuation.

Daily chart

On the daily chart, there is a bullish indication, as the index forms higher low and higher high. At the current time, the index is swinging lower. If a higher low printed after the swing then traders will expect a bullish continuation above 94.00 – 94.30 area.

Trade plan (For US dollar pair)

The overall trend of the US Dollar Index continues to be bearish on the long-term. There was a bullish reaction in the previous month but no follow-through yet. On the lower time-frame, we could spot possible bullish short-term reversal. The 94.00 – 94.30 will become the key area to watch.

If the index could extend its bullish movement and close the month above the previous month high then traders will expect further bullish correction to target 95.00 and 96.10. At the current time, it is better to take short-term long trade while waiting for additional bullish trends.

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