Dollar Index DXY technical analysis is no longer bearish. A strong demand imbalance on the monthly timeframe has taken control. Selling Dollar Index DXY smaller timeframes is suicidal in this scenario. A new year has started with Dollar Index DXY right at a strong demand imbalance where a decent bullish reaction is expected. Dollar Index DXY technical analysis using supply and demand imbalances is attached below. This imbalance is affecting many US Dollar cross pairs like USDSGD and others. It’s not a good idea to go against this strong demand imbalance.
Dollar Index DXY technical analysis is no longer bearish. A strong demand imbalance on the monthly timeframe has taken control. Selling Dollar Index DXY smaller timeframes is suicidal in this scenario. A new year has started with Dollar Index DXY right at a strong demand imbalance where a decent bullish reaction is expected. See DXY monthly timeframe attached below. There are three strong imbalances, the bottom one is the demand zone that has just gained control. Remember that this is Dollar Index DXY monthly chart, it’s a long-term technical analysis that can be used for shorter-term and intraday Forex strategies if you are not a supply and demand trader.
As explained in a previous Dollar Index DXY technical analysis, the US Index has reacted as expected to the top supply imbalance. Dollar Index DXY is now too cheap to sell with a strong demand imbalance in control. No shorts are allowed.
Dollar Index DXY could continue to drop further; however, it’s not what usually happens when such a strong imbalance gains control. It’s right at these imbalances where reversals could happen. We are talking about the odds. These odds give us an edge. It does not mean that the Dollar Index DXY could continue to drop even further, eliminating the demand imbalance that is now in control. If you are an intraday Forex trader using smaller timeframes like M5, M15 or even H1 (hourly), those trades must have been losses. Why? Look at the current price for the Dollar Index DXY is located. The monthly chart attached below is self-explanatory.
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 wait for the correct scenarios and setups to happen patiently. 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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