U.S. Dollar Index Futures (DX) Technical Analysis – Strengthens Over 96.485, Weakens Under 96.405

The U.S. Dollar is trading a little better against a basket of major currencies on Tuesday despite on-going geopolitical tensions. Middle East tensions have cooled a bit since Friday, leading some short-sellers to book profits, while waiting for further developments.

The market is trading inside Monday’s range, which suggests investor indecision and impending volatility. This is understandable since investors are still trying to figure out the dollar’s current role – is it a safe-haven assets or an investment? Until traders decide, we could see 2 to 3 days of sideways trading.

At 12:10 GMT, March U.S. Dollar Index futures are trading at 96.445, up 0.095 or +0.10%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 96.020 will signal a resumption of the downtrend. The main trend will change to up on a move through 97.405.

The minor trend is also down. A trade through 96.795 will change the minor trend to up. This will shift momentum to the upside.

The major support area is a retracement zone at 96.405 to 95.925. The lower end of this zone stopped the selling at 96.020 on December 31. Traders are now trying to build support on the strong side of the upper level at 96.405.

The short-term range is 97.405 to 96.020. Its retracement zone at 96.715 to 96.875 is the first upside target. This zone stopped the buying at 96.795 on January 3. Trader reaction to this zone will determine if the buying is getting stronger or if the sellers are forming a secondary lower top.

Daily Technical Forecast

Based on the early price action and the current price at 96.445, the direction of the March U.S. Dollar Index the rest of the session on Tuesday is likely to be determined by trader reaction to the 50% level at 96.405 and the downtrending Gann angle at 96.485.

Bullish Scenario

A sustained move over 96.485 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the short-term 50% level at 96.715, followed by a minor top at 96.795 and a downtrending Gann angle at 96.845.

Bearish Scenario

A sustained move under 96.485 will signal the presence of sellers. Crossing to the weak side of the downtrending Gann angle at 96.280 will indicate the selling is getting stronger. This could trigger an acceleration into the main bottom at 96.020, followed by the major Fibonacci level at 95.925.