USD bullish?

Forex Analysis

What are your thoughts about the USD? Are you bullish or bearish? Or you just don’t do this kind of analysis?

Look, I always try not to make any pre-judgement and to trade based on what each instruments is telling me.

But sometimes you can use other information (like this one) to help you make batter decisions.

Let me show you this chart and and I’ll get to my point…

This is the US Dollar Index 1W chart:

What can you tell me about this chart?

It traded in a clear range for almost two years (2015 and 2016). Late 2016 it broke through the resistance level.

Now, what I want you to focus on is on the blue rectangle.

For me, it’s not about what the market is doing, but how is it doing it.

It’s very important to visualize the way the market was rejected from the main support level. That pattern (the two candlesticks inside the rectangle) has very strong upward pressure, which tells me that it will probably continue its way up.

Now, we are talking about the US dollar index here, which basically charts the performance of the US dollar against a basket of currencies (EUR[57.6%], JPY[13.6%], GBP[11.9%], CAD[9.1%], SEK[4.2%] and CHF[3.6%]) and we don’t trade this… but this can definitely help you clear things up on other currency pairs, at least for the long term analysis.

So now that we know that the USD is more likely to move up, we can go ahead and analyze the USD against other currencies and see if this can be confirmed.

Remember traders, this is only to confirm your analysis, never take a decision on one instrument because of what other instrument is doing.

Whats your take in the USD?
Do you know why the EUR is weighted 57.6% in the US Dollar index?

Let me know in the comment section.

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Raul Lopez

I've been trading the markets for more than 15 years. I believe the best way to trade is by adapting to the market conditions. You can learn it too, join our community .

  • Eric Aroh

    I saw a very (strong) Bullish Engulfing candle at the Support.
    The momentum this will generate will carry the price action towards the middle of the range towards the next Resistance level.
    I will check to ensure there is sufficient volatility when trading the USD against other currencies.

    • Raul Lopez

      Yep, agree with you… thank you as always for your comments Eric! Cheers!

  • josh9657

    Well, we are at Major decision point so its too early to say if its bullish or bearish since we are just playing around major Support. The upper blue line is actually around 110.50 level. So Let’s wait for the clear break to make a decision.

    • Raul Lopez

      Hey Josh, than you for your input… yep, we are talking about the weekly chart, so it might take a while…

      We’ll see what happens!

  • Sylvester

    I see more bears in the rectangle than bulls. The support is definitely breaking. Just what am seeing
    Still learning though

    • Raul Lopez

      Hey Sylvester… thank you for your comment…

      Look at the rectangle… First a large bearish candlestick. Bears tried to break through that support level, at some point they were winning.

      But then something happened, the balance between supply and demand changed. Bulls were attracted (maybe because of the cheap prices or maybe for another reason), the thing is that they pushed really hard, thus forming the second and larger “green” candle.

      This tells me that the market is still not ready to break through that support level down.

      Does it make sense?

      • Sylvester

        Ah! Sorry about my analysis. I was judging by another eurusd weekly I just saw before seeing this post.
        I buy your position but remember am trying to learn from more experienced traders like you.

        • Raul Lopez

          Ahh no worries Sylvester! We are all here to learn! Good luck and let me know if you need anything!