Dollar Index (DXY) Indicator

Dollar Index (DXY) Indicator

The Dollar Index (DXY) indicator for MT4 is a custom trading tool that automatically measures the relative strength of the U.S. dollar in the financial market.

The Dollar Index (DXY) indicator for MetaTrader is a custom trading tool that measures the relative strength of the U.S. dollar in the financial market. It was developed to replace the regular MT4 chart of the U.S. dollar index that displays the strength/weakness of the U.S. dollar.

Which pairs are affected by DXY?
The DXY is used by a financial analyst in the forex market to predict the trend direction of a currency pair that is affected by the strength/weakness of the U.S. dollar. For instance, a rise in the strength of the U.S. dollar index would most likely cause the U.S. dollar base currency pairs (e.g. EURUSD, GBPUSD, etc.) to move bearish, while the quote currency pairs (e.g. USDCAD) would most likely move bullish.

The indicator automatically analyzes the trend direction of the U.S. dollar index and then displays it on your MT4 chart. The red line of the indicator is used to depict the trend direction of the U.S. dollar index. Besides, it also comes with moving averages as confluence to filter the trend direction. What’s more, it is suitable for novice, intermediate, and advanced forex traders.

How to Trade With The Dollar Index (DXY) Indicator

The above image depicts the action of the indicator on a EURUSD pair in the H1 timeframe. It also typifies how to use the indicator in line with price action to confirm the trend direction of a financial asset.

The image shows that the price created a head and shoulder pattern, which indicates a potential bearish reversal. Furthermore, the price broke out of the counter-trend line, which further suggests a strong indication of a possible bearish move. Finally, the DXY indicator shows an imminent rise in the strength of the dollar index and also crossed over the moving averages to the upside, which further suggests that the relative strength of the U.S. dollar is about to rise.

Conclusion
The Dollar Index (DXY) indicator for MT4 is essentially a tool that would make technical analysis of the U.S. dollar to be a lot easier for you. It takes away the pain of manual analysis of the trend strength/weakness of the U.S. dollar index. Finally, it is free to download.