As expected and mentioned in the previous Dollar Index DXY analysis, we had a strong monthly supply imbalance that took control, and a big sell-off was expected. That’s exactly what has happened on Dollar Index DXY. A very similar technical analysis was done for EURUSD Forex technical analysis and forecasted a few more weeks back, a very strong monthly imbalance gained control on EURUSD last March 2020 at around 1.0654, and it has not stopped rallying ever since.
The same technical supply and demand analysis can be done for Dollar Index DXY. This sell-off affects many US dollar Forex cross pairs since most US dollar currency pairs are highly correlated to the American Dollar. A new strong weekly supply imbalance has been created slightly higher. See DXY weekly timeframe analysis below.
As supply and demand traders, we must pay attention to strong imbalances like the one we can see on Dollar Index DXY. Trading against them is never a good idea, it would be like accelerating your car while driving towards a heavy traffic jam.
Watch the Dollar Index DXY video analysis and forecast for August 2020.
This is the kind of price action technical analysis you will learn in our trading community. You will learn how to locate new supply and demand imbalances and trade without using any indicators, no news, no fundamental analysis, no earnings announcements, no volume or VSA analysis. Just supply and demand imbalances.
Trading supply and demand imbalances is ideal for beginners and those with a full or half-time job. You won’t need to stay in front of the computer all day long trying to move price action with your mind.
As supply and demand traders, we do not need to pay attention to the news, fundamentals or any earnings reports. Once a big timeframe imbalance has gained control, earnings do just the opposite and react strongly to those imbalances. Why do you see positive earnings and then the underlying stock drops like a rock, or a negative earnings announcement and the stock rallies like a rocket out of control? You are probably missing the fact that there are big imbalances in gaining control.
You should not worry about fundamentals or earnings announcements unless you are doing very short-term trading and scalping.
You can use these imbalances to plan your trades in lower timeframes. Trading is just waiting for the right trigger points and scenarios to present themselves, this game has got a name and it’s called the waiting game. We need to patiently wait for the correct scenarios and setups to happen and wait for the price to pull back or dip into the price levels we want to trade, in our case these price levels are made of supply and demand imbalances.
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