Dollar Index – Monthly Analysis
In this U.S. Dollar Index monthly report, we evaluate the outlook by breaking down the latest rally through candlestick structure, momentum, key technical levels, and the Elliott Wave framework. By aligning these signals, we identify the highest-probability paths ahead and assess what the Greenback may be setting up for the weeks and months to come.
CANDLES
It appears the Dollar has put a cap on its skid, and the monthly outcome is striking. Had the Greenback simply closed below the October low with a standard red candle, the story would have remained clearly bearish. Instead, it attempted to do two things at once—break to new lows and negate the July Bullish Engulfing (circled). That attempt failed. Bears were rejected from the lower low, and what started as a red candle finished as an Inverted Hammer, closing back inside the body of July’s candle. The result is a major failure for bears, shifting the monthly odds back to bullish, with July’s Bullish Engulfing reasserting control.
That message is reinforced on lower frames. The weekly printed a strong Dragonfly Doji with a gap, and the daily minimally confirmed a reversal via a Harami, while also reclaiming the 8 EMA. Together, these signals suggest exhaustion of the recent decline and a turn in momentum.
Overall, the U.S. Dollar Index is now positioned for a rally—potentially a sizeable one—following a broad-based technical rejection across multiple time frames.
ELLIOTT WAVES
At this stage, there is no substantial evidence to justify a change in the very long-term outlook. January’s move respected the flag boundary precisely, potentially completing the classical pattern and reinforcing the existing long-term framework rather than altering it.
Road Map
The mid-term roadmap remains unchanged. At the micro level, the wave up has just started and we need time for it to mature to evaluate the character and structure.
SUMMARY
The U.S. Dollar Index flipped bullish in the final week of January, marking a clear shift in tone. A failed breakdown attempt on the monthly chart, followed by bullish reversal signals on the weekly and daily frames, suggests seller exhaustion and a loss of bearish control.
Technically, the Dollar respected key long-term structures and reclaimed short-term momentum. While follow-through is still needed, the late-January reversal improves the bullish odds and points to a developing rebound rather than a continuation lower.
Happy Trading!
