U.S. Dollar Index (DX) Futures Technical Analysis – Trader Reaction to 92.850 Pivot Set Early Tone
The U.S. Dollar closed higher against a basket of major currencies on Friday, also finishing better for a second straight week, on increased demand for higher-yielding assets. The move was supported by strong Wall Street earnings that helped investors regain some confidence in the midst of worries that the Delta coronavirus variant could derail the global recovery.
On Friday, September U.S. Dollar Index futures settled at 92.928, up 0.098 or +0.11%. So far in July, the dollar has gained 0.6%, after rising 2.8% in June.
In other news, according to data from the Commodity Futures Trading Commission (CFTC), U.S. Dollar positioning among short-term investors in the week-ended July 20 has flipped to net longs for the first time since March 2020.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, however, momentum shifted to the downside following the confirmation of the closing price reversal top on July 21.
A trade through 93.195 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through 92.075.
The minor trend is also up. A trade through 92.505 will change the minor trend to down. This will also confirm the downward shift in momentum.
The minor range is 93.195 to 92.505. On Friday, the index settled on the strong side of its pivot at 92.850.
On the downside, the first support is a Fibonacci level at 92.495, followed by a 50% level at 92.350. These two levels form a potential support cluster.
Daily Swing Chart Technical Forecast
The direction of the September U.S. Dollar Index early Monday is likely to be determined by trader reaction to the pivot at 92.850.
A sustained move over 92.850 will indicate the presence of buyers. If this move can create enough upside momentum then look for the rally to possibly extend into the reversal top at 93.195. Taking out this level will signal a resumption of the uptrend with the March 31 main top at 93.430 the next likely upside target.
A sustained move under 92.850 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the support cluster at 92.495, 92.505 and 92.350. The latter is a potential trigger point for an acceleration to the downside.