US Dollar Index (DX) Futures Technical Analysis – July 27, 2016 Forecast

September U.S. Dollar Index futures closed lower on Tuesday, recovering from a sharp break early in the session that was fueled by a strong rally by the Japanese Yen. Position-squaring ahead of the U.S. Federal Reserve’s monetary policy statement on Wednesday was also behind the volatility.

The main trend is up according to the daily swing chart. However, the closing price reversal top on July 25 has shifted momentum to the downside. Taking out 97.62 will negate the chart pattern and signal a resumption of the uptrend. A trade through 95.84 will turn the main trend to down.

The major range is 100.95 to 92.00. The market is currently trading inside its retracement zone bounded by 96.48 to 97.53. Trader reaction to this zone will determine the longer-term trend of the index.

The main range is 93.025 to 97.62. Its retracement zone at 95.32 to 94.78 is a potential downside target today.

The short-term range is 95.84 to 97.62. Its retracement zone at 96.73 to 96.52 is the first downside target today.

The short-term Fib at 96.52 and the long-term 50% level at 96.48 create a key support cluster.

Based on Tuesday’s close at 97.21, look for an upside bias to develop on a sustained move over 97.53. This could lead to a test of 97.62 then 98.09. Overtaking 98.09 will put the index in a bullish position with the next major targets 98.31, 98.50 and 98.745.

A sustained move under 96.97 will give the index a downside bias. The next break is likely to be labored because of a series of potential support levels at 96.73, 96.52, 96.48 and a pair of angles at 96.40 and 96.38.

The daily chart opens up to the downside under 96.38 with the next likely targets coming in at 96.03 and 95.88.