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

By:
James Hyerczyk
Published: Sep 27, 2016, 11:13 UTC

December U.S. Dollar Index futures are trading slightly better shortly before the regular session opening. The reason for the move is mixed results in the

us-dollar-index

December U.S. Dollar Index futures are trading slightly better shortly before the regular session opening. The reason for the move is mixed results in the foreign currency market.

The dollar is up strong versus the Japanese Yen and mildly higher against the Euro because of higher demand for risky assets. These two currencies are funding currencies for the stock market. The dollar is losing ground against the Australian and New Zealand Dollars because some investors are chasing yields. The dollar is also trading better against its Canadian counterpart because crude oil prices are weaker.

TECHNICAL ANALYSIS

daily-december-u-s-dollar-index
Daily December U.S. Dollar Index

Technically, the main trend is up according to the daily swing chart. It turned up last week when the index surged through 96.21, the same day it made a short-term top at 96.035. Momentum has been to the downside since September 21. A trade through 94.95 will turn the minor trend to down. A trade though 94.385 will turn the main trend to down.

The main range is 94.385 to 96.305. Its retracement zone at 95.345 to 95.12 is currently being tested. Trader reaction to this zone is likely to determine the longer-term direction of the market.

The new short-term range is 96.305 to 94.95. Its retracement zone at 95.63 to 95.79 is the primary upside target.

FORECAST

BASED ON THE CURRENT PRICE AT 95.24, THE DIRECTION OF THE DECEMBER U.S. DOLLAR INDEX TODAY IS LIKELY TO BE DETERMINED BY TRADER REACTION TO A PAIR OF GANN ANGLES AND THE RETRACEMENT ZONE.

A SUSTAINED MOVE OVER THE DOWNTRENDING ANGLE AT 95.31 WILL INDICATE THE PRESENCE OF BUYERS. THIS COULD GENERATE THE UPSIDE MOMENTUM NEEDED TO CHALLENGE THE 50% LEVEL AT 95.345.

THE 50% LEVEL AT 95.345 IS THE TRIGGER POINT FOR AN ACCELERATION TO THE UPSIDE. THE DAILY CHART SHOWS THERE IS PLENTY OF ROOM TO RALLY INTO THE NEAREST TARGET AT 95.63.

A SUSTAINED MOVE UNDER 95.20 WILL SIGNAL THE PRESENCE OF SELLERS. THIS COULD LEAD TO A QUICK BREAK INTO THE FIBONACCI LEVEL AT 95.12.

THE FIBONACCI LEVEL AT 95.12 IS THE TRIGGER POINT FOR THE START OF A STEEP SELL-OFF WITH THE FIRST TARGET LAST WEEK’S LOW AT 94.95, FOLLOWED BY AN UPTRENDING ANGLE AT 94.79.

FOR MORE CAUTIOUS TRADERS, LOOK FOR AN UPSIDE BIAS TO BEGIN ON A SUSTAINED MOVE OVER 95.35 AND A DOWNSIDE BIAS ON A SUSTAINED MOVE UNDER 95.11.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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