US Dollar Index (DX) Futures Technical Analysis – May 25, 2016 Forecast

June U.S. Dollar Index futures are trading lower on Wednesday. Yesterday, the index reached its highest level since March 29, but there has been no follow-through to the upside in the early session. This could be a sign of selling pressure, most likely being fueled by profit-takers.

The main trend is up according to the daily swing chart. The main range is 98.70 to 91.88. Its retracement zone is 95.29 to 96.095. This was the primary objective of the 91.88 closing price reversal bottom so I expected to see sellers show up on a test of this zone.

The market is also trading on the weak side of an uptrending angle at 95.88. This is also a sign that the upside momentum is slowing. This angle, moving up at a rate of .25 per day since May 3, provided support and guidance for 15 market sessions.

The inability to cross over to the strong side of the angle at 95.88 could encourage profit-taking. This could drive the market into the main 50% level at 95.29.

A failure to hold 95.29 could drive the index into the long-term downtrending angle at 94.95. The daily chart opens up to the downside under this angle. This could trigger the start of a steep sell-off since the next major target doesn’t come in until 93.88.

Overcoming 95.88 will put the index in a bullish position with the next target the Fib level at 96.095. This is a potential trigger point for an acceleration into the nearest downtrending angle at 96.83.

Look for an upside bias to develop on a sustained move over 95.88 and a downside bias to develop on a sustained move under 95.29.