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U.S. Dollar Index Futures (DX) Technical Analysis – Looking for Counter-Trend Rally to Extend into 97.170 – 97.380

By:
James Hyerczyk
Published: Dec 19, 2019, 00:44 UTC

If the counter-trend rally continues then look for a drive into the short-term 50% level at 97.170. Watch for sellers on the first test of this level. Overtaking 97.170 could trigger an acceleration into the short-term Fibonacci level at 97.380, followed closely by the minor top at 97.400.

U.S. Dollar Index

The U.S. Dollar surged against a basket of major currencies on Wednesday as U.S. economic data from Tuesday suggested the Federal Reserve was unlikely to cut interest rates further and as liquidity dried up head of the upcoming Christmas and New Year holidays.

The Euro weakened despite stronger German business sentiment data. Meanwhile, the British Pound lost all of its election gains on fears the U.K. could leave the European Union without a trade deal.

On Wednesday, March U.S. Dollar Index futures settled at 96.963, up 0.186 or +0.19%.

U.S. Dollar Index
Daily March U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, a counter-trend rally is taking place that could lead to a 50% to 61.8% retracement of last break.

A trade through 98.045 will change the main trend to up. A move through 96.295 will signal a resumption of the downtrend.

The minor trend is also down. A trade through 97.400 will change the minor trend to up. This will shift momentum to the upside.

The main range is 94.665 to 98.735. Its retracement zone at 96.700 to 96.220 is support. This zone is controlling the longer-term direction of the index.

The short-term range is 98.045 to 96.295. Its retracement zone at 97.170 to 97.380 is the primary upside target. Since the main trend is down, look for sellers to re-emerge on the first test of this zone. They are going to try to form a secondary lower top.

Daily Swing Chart Technical Forecast

The nearest support is the main 50% level at 97.700. There is plenty of room under this level so if it fails, don’t be surprised by a steep break into the main bottom at 96.295, followed closely by the main Fibonacci level at 96.220.

If the counter-trend rally continues then look for a drive into the short-term 50% level at 97.170. Watch for sellers on the first test of this level.

Overtaking 97.170 could trigger an acceleration into the short-term Fibonacci level at 97.380, followed closely by the minor top at 97.400.

Side Notes

Since traders are keyed in on U.S. economic data this week, watch for reactions to Thursday’s Philly Fed Manufacturing Index, Weekly Unemployment Claims and the Existing Home Sales report.

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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