US Dollar Index (DX) Futures Technical Analysis – August 26, 2016 Forecast

September U.S. Dollar Index futures whip-sawed during Fed Chair Janet Yellen’s speech today at Jackson Hole, Wyoming. The tone of the speech at first was perceived as hawkish, triggering a jump in U.S. treasury yields and the dollar index. However, as she continued speaking, traders became more convinced that she was not offering any clarity in respect to the timing of the next Fed rate hike, and the index weakened.

Technically, the main trend is down according to the daily swing chart. Today’s price action made 94.05 a new swing bottom, but the move fell well short of indicating a change in trend was imminent. This will only occur on a breakout over 96.50. A trade through 94.05 will signal a resumption of the downtrend.

The main range is 93.025 to 97.62. Its retracement zone is 95.28 to 94.78. Holding below this zone will keep the downside pressure on the market. A move above this zone will indicate the buying is getting stronger.

The short-term range is 96.50 to 94.05. Its retracement zone at 95.28 to 95.56 is the primary upside target. The best upside target is the resistance cluster formed by the pair of 50% levels at 95.28 and 95.32.

Based on the current price at 94.52, the direction of the index the rest of the session is likely to be determined by trader reaction to the downtrending angle at 94.50 and the uptrending angle at 94.46.

Crossing to the bullish side of the downtrending angle at 94.50 and sustaining the move will signal the presence of buyers. This is followed closely by the main Fibonacci level at 94.78. This is a trigger point for an acceleration into the 50% cluster at 95.28 to 95.32.

A sustained move under the long-term uptrending angle at 94.46 will indicate the presence of sellers. The first downside target is the main bottom at 94.05. Taking this out will change the main trend to down and likely trigger an acceleration into the next major uptrending angle at 93.74.

Basically, were looking for an upside bias to develop today on a sustained move over 94.50 and a downside bias to develop on a sustained move under 94.46.