US Dollar Index (DX) Futures Technical Analysis – October 28, 2016 Forecast
The December U.S. Dollar Index is trading slightly lower shortly before the regular session opening. The range is tight and the volume is low as traders await the release of the Advance GDP report at 1230 GMT. It is expected to show the economy grew by 2.5%. Forecasts call for a range of 1.3% to 3.6%, making the report vulnerable to surprises.
Since there will be a revision, investors should prepare for a possible two-sided move upon the release of the number. So if you’re a short-term day-trader look to play both directions. If you’re a longer-term day-traders then wait for the market to settle on a direction before making your move.
Your capital is at risk
Technical Analysis
The main trend is up according to the daily swing chart. However, the upside momentum slowed down earlier in the week with the formation of the closing price reversal top at 99.09 on October 25 and the subsequent follow-through move on Thursday.
The short-term range is 97.60 to 99.09. Its retracement zone at 98.345 to 98.17 is the first downside target. This zone was tested successfully on Wednesday when the market reached its low for the week at 98.315.
The main range is 95.245 to 99.09. Its retracement zone at 97.17 to 96.71 is the primary downside target.
Forecast
Based on the current price at 98.83 and the earlier price action, the direction of the U.S. Dollar Index today is likely to be determined by trader reaction to the former top at 98.79.
A sustained move over 98.79 will indicate the presence of buyers. This could create enough upside momentum to challenge the closing price reversal top at 99.09. Taking out this level will negate the chart pattern and could trigger an acceleration to the upside with the next targets coming in at 99.50 and the psychological 100.00 level.
A sustained move under 98.79 will signal the presence of sellers. The daily chart opens up to the downside under this level with the next targets the short-term 50% level at 98.345 and the short-term Fibonacci level at 98.17.
Taking out the Fib level at 98.17 will indicate the selling is getting stronger with the next target an uptrending angle at 97.87, followed by the October 18 low at 97.60.