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

September U.S. Dollar Index futures are trading lower shortly before the regular session opening. Yesterday, the index posted a closing price reversal top. This was confirmed earlier today, setting up the index for a possible 2 to 3 day correction.

The main trend is up according to the daily swing chart. A trade through 97.62 will negate the closing price reversal top and reaffirm the uptrend. A trade through 95.84 will turn the main trend to down. Yesterday’s closing price reversal top and subsequent follow-through break indicates that momentum has shifted to the downside.

The main range is 100.95 to 92.00. The market is currently trading inside its retracement zone at 96.475 to 97.53. This zone is controlling the long-term direction of the market.

The short-term range is 95.84 to 97.62. Its retracement zone at 96.73 to 96.52 is today’s downside target. Since the main trend is up, buyers may come in on a test of this zone.

Based on the current price at 97.11, the nearest support is an uptrending angle at 96.84. Support becomes layered under this price with potential targets at 96.73, 96.52, 96.48 and a pair of angles at 96.34 and 96.31.

The best downside target today for support is 96.52 to 96.48, followed by 96.34 to 96.31.

On the upside, the first target is the intraday high at 97.345, followed by the major Fib at 97.53 and the closing price reversal top at 97.62. Crossing to the strong side of the steep uptrending angle at 97.84 will put the index in a bullish position.

Although the market is under pressure because of the closing price reversal top, the best opportunity is still on the long side because of the possibility of a hawkish Fed statement on Wednesday. The best support area is the zone between 96.73 and 96.31.