DXY (US Dollar Index) 4H Timeframe Analysis

DXY (US Dollar Index) 4H Timeframe Analysis

Trend Analysis
On the 4-hour timeframe, DXY is currently in an uptrend, with price action recently breaking through a major key resistance level at 108.900, which is now acting as a strong support. This breakout marks a potential continuation of the bullish trend. The market has formed a clear 3-bottom reversal pattern, indicating strong buying momentum as price pulls back for a liquidity hunt below the minor key support.

Currently, the price is in a consolidation phase near the liquidity zone, ready to test the minor key resistance at 109.040. If the price breaks above this resistance after the liquidity hunt, we expect continued bullish momentum toward the next resistance level at 110.290.

Price Action Expectation:
Our objective is to wait for a price manipulation period at the liquidity zone, where we expect a brief dip to liquidate all buyer stop-losses. After this, we anticipate a strong rebound and a potential breakout above the minor key resistance.
Wait for price to break above the minor resistance at 109.040.
Look for confirmation of a bullish continuation with increased volume as the price reacts to any positive economic news, such as strong retail sales and low unemployment claims.
Expect the price to rally toward the next significant resistance level at 110.290.

Trade Setup:

Trade Type: Buy Stop (Breakout Entry)
Entry: 109.040 (after a confirmed breakout above minor resistance)
Stop Loss: 108.550 (below liquidity zone to avoid false breakouts)
Take Profit: 110.290 (next significant resistance level)

News Catalyst
The upcoming economic data, such as Core Retail Sales and Unemployment Claims, could have a significant impact on the USD. A positive retail sales number (forecasted at 0.5%) would likely support the uptrend in DXY, as would a lower-than-expected unemployment claims number (forecasted at 210K). Strong data from these releases would reinforce the bullish sentiment for the USD, pushing DXY towards the next key resistance.

Conclusion:
DXY shows strong bullish potential based on a clear trend break and positive economic data outlook. The strategy focuses on waiting for the breakout confirmation, entering at a strategic point, and riding the momentum toward the next resistance level.

Risk Management:
Maintain a 1:2+ risk-to-reward ratio to optimize trade outcomes.
Position size should align with your account equity to manage risk effectively.
Monitor economic news closely, as it could influence short-term market fluctuations.
Trading involves significant risks and is not suitable for all investors. Always: Seek advice from a financial professional if unsure about trading decisions.