31.01.202308:12 Forex Analysis & Reviews: Trading plan for US dollar index on January 31, 2023

Technical outlook:

The US dollar index dropped through the 101.26-28 intraday lows on Monday to terminate its ongoing triangle consolidation before turning higher. The index has rallied sharply since then and is seen to be trading just below 102.00 at this point in writing. The recent rally could be seen as the first leg of a potential bullish breakout above the 102.20-50 zone.

As depicted on the 4H chart here, the US dollar index has completed its larger-degree drop from 114.70, which began in September 2022. Prices are expected to produce a meaningful rally towards 106.50 and up to 109.50. Also, note that the above rally could be corrective and just a retracement of the entire drop between 114.70 and 101.10.

The US dollar index could find strong intraday support around the 101.40-50 zone and it might be seen as an opportunity to add further long positions. On the other side, please keep a watch on 102.20, as a break higher would confirm that the bulls are back in control and want to accelerate the rise. Only a consistent break below 101.00 would negate the bullish scenario.

Trading idea:

Potential bullish reversal against 100.00

Good luck!