U.S. Dollar Index Futures (DX) Technical Analysis – August 14, 2019 Forecast

The U.S. Dollar is trading flat against a basket of major currencies early Wednesday. The market is trading inside yesterday’s relatively wide range, suggesting early trader indecision and impending volatility. So far there has been no follow-through to the upside following yesterday’s strong surge. That move was fueled by a spike in demand for higher-yielding assets after the U.S. delayed some tariffs against China until the middle of December.

At 04:29 GMT, September U.S. Dollar Index futures are trading 97.615, down 0.016 or -0.02%.

The biggest influence on the index on Tuesday and early Wednesday is the Japanese Yen. Yesterday’s news fueled a huge short-covering rally that drove the dollar higher against the Japanese currency. The dollar also posted a wicked two-sided trade against the Canadian Dollar before finishing lower. The greenback posted a closing price reversal bottom against the Swiss Franc. The trade in the Euro and British Pound was relatively limited.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. Momentum is edging slightly higher, helped by a minor closing price reversal bottom at 96.980 on August 6, but capped by a major closing price reversal top at 98.700 on August 1.

A trade through 98.700 will signal a resumption of the uptrend. A move through 96.320 will change the main trend to down.

The minor trend is also up. A trade through 96.980 will change the minor trend to down. This will confirm a shift in momentum to the downside.

The main range is 95.365 to 98.700. Its retracement zone at 97.035 to 96.640 is controlling the longer-term direction of the index. This zone is also support. It stopped the selling at 96.980 on August 6.

The intermediate range is 96.320 to 98.700. The index closed on the strong side of its retracement zone at 97.510 to 97.230, making it new support.

The short-term range is 98.700 to 96.980. It retracement zone at 97.840 to 98.045 is the next upside target. If the index is topping then sellers are likely to come in on a test of this zone. They are going to try to form a secondary lower top.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 97.615, the direction of the September U.S. Dollar Index on Wednesday is likely to be determined by trader reaction to the intermediate 50% level at 97.510.

Bullish Scenario

A sustained move over 97.510 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into 97.840 to 98.045. Watch for aggressive counter-trend sellers on the first test of this area.

Bearish Scenario

A sustained move under 97.510 will signal the presence of sellers. The first target is the intermediate Fibonacci level at 97.230. The index has straddled this level for 7 out of 8 sessions. If it fails then look for the selling to possibly extend into the main 50% level at 97.035, followed closely by the minor bottom at 96.980.