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

June U.S. Dollar Index futures are trading lower and on the weak side of a key 50% level. This indicates that sellers are gaining control. The selling pressure is likely a combination of profit-taking and aggressive shorting.

The main trend is up according to the daily swing chart, but the market is due for a retracement in order to alleviate the overbought condition.

The main range is 98.70 to 91.88. Its retracement zone is 95.29 to 96.095. This zone basically stopped the rally. A trade to the weak side of the 50% level at 95.29 today is a sign of increasing selling pressure.

The short-term range is 91.88 to 95.67. Its retracement zone at 93.775 to 93.33 is the primary downside target. Since the main trend is up, a move into this retracement zone will likely be welcomed by buyers.

Based on yesterday’s close at 95.34 and the current price, the direction of the market the rest of the session is likely to be determined by trader reaction to the main 50% level at 95.29.

A sustained move under 95.29 will indicate the presence of sellers. The first downside target today is a long-term downtrending angle at 94.95.

Crossing to the weak side of the angle at 94.95 will put the index in a bearish position. This could lead to an acceleration to the downside with the next target an uptrending angle at 94.01.

A sustained move over 95.29 will signal the presence of buyers. This may create enough upside momentum to challenge the top at 95.67.

The uptrend resumes on a trade through 95.67. This could fuel an acceleration to the upside with the next target the Fib level at 96.095.

Watch the price action and read the order flow at 95.29 all day. Trader reaction to this level will tell us if the bulls or the bears are controlling the trade.