US Dollar Index (DX) Futures Technical Analysis – May 24, 2016 Forecast

June U.S. Dollar Index futures are inching higher on Tuesday after an attempt to break the market failed earlier in the session. The market is trading inside a major retracement zone and is up 15 days from its last main bottom so buyers seem to be a little hesitant at current price levels. Nonetheless, the three days of consolidation could mean the market is getting ready to launch another leg up. Be prepared for increased volatility.

The main trend is up according to the daily swing chart. The market is in no position to turn the main trend to down. However, it is in the window of time for a closing price reversal top. This would be caused by unexpected bad news or aggressive profit-taking.

The main range is 98.70 to 91.88. Its retracement zone is 95.29 to 96.095. This zone is currently being tested. Trader reaction to this zone will determine the longer-term direction of the index.

Based on yesterday’s close at 95.22 and the earlier price action, the direction of the market today is likely to be determined by trader reaction to the main 50% level at 95.29.

A sustained move over 95.29 will indicate the presence of buyers. This could create enough upside momentum to challenge the uptrending angle at 95.63. Overtaking this angle will put the index in a bullish position. This would set up the market for another surge into the Fibonacci level at 96.095.

The daily chart begins to open up over 96.095 with the first target the March 28 main top at 96.42. This is followed by a downtrending angle at 96.86.

The inability to overcome the angle at 95.63 will be the first sign of selling pressure. A sustained move under 95.29 will indicate the selling pressure is getting stronger. A move under 95.22 will put the index in a position to form a closing price reversal top.

Crossing to the weak side of the long-term downtrending angle at 95.01 will put the index in an extremely bearish position.

Based on the current price at 95.40, watch the price action and read the order flow at 95.63 and 95.29.

Look for a strong upside bias to develop on a sustained move over 95.63 and a downside bias to develop on a sustained move under 95.29.