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U.S. Dollar Index (DX) Futures Technical Analysis – Closing Price Reversal Signals Short-Term Top

By:
James Hyerczyk
Updated: Apr 2, 2021, 21:06 GMT+00:00

The short-term direction of the June U.S. Dollar Index is likely to be determined by trader reaction to 93.005.

US Dollar Index

The U.S. Dollar hit a multi-month high against a number of currencies and a one-year high against the Japanese Yen on Wednesday before closing lower as investors booked profits ahead of the end of the month/quarter and the start of a long Easter holiday weekend.

The early rise was fueled by investors betting that fiscal stimulus and aggressive vaccinations will help the U.S. economy recover at a faster pace from the effects of the global pandemic than most major economies.

On Wednesday, June U.S. Dollar Index futures settled at 93.235. This was down from a high of 93.470.

Also on Wednesday, U.S. President Joe Biden outlined how he intends to pay for a $3 trillion to $4 trillion infrastructure plan, after earlier this week saying 90% of adult Americans would be eligible for vaccination by April 19.

Daily June U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, the formation of the closing price reversal top is an early indication that momentum may be getting ready to shift to the downside.

A trade through 93.470 will negate the closing price reversal top and signal a resumption of the uptrend. Taking out 93.005 will confirm the closing price reversal top. This will shift momentum to the downside.

A closing price reversal top will not change the main trend to down, but if confirmed, it could trigger the start of a 2 to 3 day counter-trend correction.

On the downside, the first two targets come in at 92.512 and 92.200. On the upside, the nearest target is the November 2, 2020 main top at 94.085.

Short-Term Outlook

The short-term direction of the June U.S. Dollar Index is likely to be determined by trader reaction to 93.005.

Bearish Scenario

A trade through 93.005 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into at least 92.510 over the next 2 to 3 sessions.

Bullish Scenario

The inability to follow-through to the downside will signal the presence of buyers. This could lead to a retest of 93.470. Taking out this level will mean that buyers have returned. This could trigger an acceleration into 94.085.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.

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