US Dollar Index Long Term Technical Analysis | October 2021

U.S dollar index long-term technical analysis

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The economic recovery play might happen at the end of the year which could drive a rally in the stock market and other instruments but not the U.S dollar. At the current time, the U.S dollar index has gained on the tapering plan by the fed and heightened inflation level. We might see the index under pressure for a while and start picking up its bullish movement again when inflation numbers creep higher.

Traders will observe the looming FOMC meeting which will give better clue on the tapering plan and interest-rate hike.

New Month

Monthly chart

The U.S dollar index managed to find a floor and currently trading upward above the orange box area. We have a lower high and higher low printed which means compression is happening. At the current time, the index is supported by the orange box area and might continue moving upward to target the trendline or level around 97.50 where the previous bearish leg started.

Weekly chart

A “W” pattern formed on the U.S dollar index weekly chart. The pattern is bullish and there is a bullish continuation toward the weekly SMA 200. No-touch on the averages yet but the index currently consolidating near it. We might see a bearish correction from the level to test the neckline of the W pattern. However, the index may continue upward and breakout above the averages without a W pattern retest too.

Traders will observe closely the index reaction near the level, for now, especially nearing the next FOMC meeting.

Daily chart

The U.S dollar index outlook is bullish on the daily chart. There is a bearish reaction from the 94.00 – 94.30 area which might bring the index down to test 93.00 or the orange box area. As the current movement might be a corrective movement only, traders will prepare for long positions in the U.S dollar when retest and bounce happen from the box area.

Trade plan (For U.S dollar pair)

On the long-term view, the index might range as the monthly chart show possible compression play. The index currently bounces from the bottom and starts moving upward. There is room for the upside and traders could use it to predict possible bearish reversal. It might be time to continue monitoring the Fed plan to face looming inflation whether using tapering or interest-rate hike.

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