FX.co ★ Trading plan for US dollar index on January 18, 2023

Technical outlook:

The US dollar index climbed through the 102.45 intraday high during the Asian session on Wednesday. The index is seen to be trading close to 102.35 at this point in writing after having carved a higher low in the 101.60-65 zone earlier. It looks like the bears have bottomed out at 101.36 over the last week as prices resume carving higher lows and higher highs.

The US dollar index is plotting a potential Morning Star candlestick pattern on the daily chart (not presented here), which could revive a rally towards 106.50 and 109.50 levels going forward. Also, note that immediate price resistance is seen through 105.35 and a break there will accelerate further towards the initial projected target.

The US dollar index is expected to be well supported around the 101.90-102.00 zone intraday. Any pullbacks towards the above range would be well supported as the bulls are regaining control. Only a consistent break below 101.30 will negate the above bullish scenario. Traders might be preparing to buy on drops towards 102.00 again, with risk towards 101.36.

Trading idea:

Potential rally against 100.00

Good luck!