Dollar Index Indicator (USDX)
Simply an indispensable indicator for those who like to establish a connection between the dollar exchange rate and the fundamental factors that influence it.
The indicator is designed to integrate such an indicator as the dollar index (USDX) into the chart of a currency pair. It not only shows the latest value, but also displays the dynamics of changes over a certain period of time.
This makes it possible to track the impact of the changes that have occurred on the exchange rate of the US dollar.
The dollar index indicator is a practically ready-made trading tool that builds a relationship (correlation) between the US dollar exchange rate and the USDX index. It can be used on any currency pair that includes the US dollar.
The dollar index reflects the US trade turnover with a number of leading world powers; it contains the proportion between imports and exports of goods, and a host of other equally important parameters are also taken into account in its calculations.
The Dollar Index (USDX) indicator is a powerful tool for news trading, and it can also be used to analyze the impact of external factors on the Forex market.
After downloading the indicator, add it to your trading terminal. This script has virtually no settings; you can only manually change the levels and customize the visual display of the lines.
After launch, it appears in a separate window as a red line; if desired, its color can be easily changed in the global settings.
As can be seen from the given example, there is a direct correlation between the increase in the value of this indicator and the US dollar exchange rate.
If the index increases, then the exchange rate of the American currency also rises confidently; in the opposite situation, the opposite happens.
As practice shows, this is one of the most accurate tools that can be used for medium-term and short-term Forex trading.
Dollar Index Trading Strategy
Almost any currency with an inverse correlation to the US dollar can be used for trading. This means that in a currency pair, one currency will be the US dollar, and the other will be the currency whose exchange rate fluctuates in the opposite direction as the dollar rises or falls.
This approach will strengthen the emerging trend and provide the opportunity to earn much more.
An example of trading can be such a popular pair as EUR/USD, the figure clearly shows that it has an inverse proportion to the dollar index (USDX), when the index value increases, the price of EUR/USD decreases and vice versa.
In this case, we buy if the index declines, and sell if it rises. The greater the change, the stronger the trend we can expect in the forex market.
One should also not exclude the possibility of using it on pairs in which the US dollar itself is the base currency.
