US Dollar Index (DX) Futures Technical Analysis – Bullish Over 94.05, Bearish Under 93.55
December U.S. Dollar Index futures are trading slightly higher at mid-week. There hasn’t been much movement according to the weekly chart. The futures market is trading inside last week’s range. This suggests investor indecision and impending volatility.
The indecision is coming from the fact that this is a holiday shortened week with a U.S. bank holiday on Thursday. Several of the major players are on the sidelines, helping to limit the price action. Traders will also have the opportunity to react to the Fed minutes from their last meeting, due to be released on Wednesday.
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Weekly Technical Analysis
The main trend is up according to the weekly swing chart. However, momentum has been trending lower since the formation of the closing price reversal top at 95.07 during the week-ending November 10.
This chart pattern isn’t signaling a change in trend, but it often leads to the start of a 2 to 3 week correction. Currently, we are in week two. A trade through 95.07 will negate the chart pattern and signal a resumption of the uptrend.
On the upside, the resistance is a retracement zone at 94.05 to 94.82.
The main range is 90.795 to 95.07. Its retracement zone at 92.93 to 93.43 is the primary downside target. Since the main trend is up, buyers are likely to step in on a test of this zone. Essentially, trader reaction on a test of this zone will determine the longer-term direction of the index.
Weekly Technical Forecast
Based on the price action this week, the direction of the index will be determined by trader reaction to the 50% level at 94.05 and the uptrending angle at 93.55.
A sustained move over 94.05 will signal the presence of buyers. This could trigger a rally into a long-term downtrending angle at 94.55, followed closely by the Fibonacci level at 94.815 and the main top at 95.07.
A sustained move under 93.55 will indicate the presence of sellers. This move could trigger an acceleration into the main retracement zone at 92.93 to 92.43, followed by an uptrending angle at 92.17.