James Hyerczyk
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U.S. Dollar Index

The U.S. Dollar hit a new high for the year against a basket of major currencies on Friday before posting a potentially bearish closing price reversal top. The chart pattern doesn’t indicate a change in trend, but it may be signaling a short-term shift in investor sentiment. If confirmed, it could trigger the start of a two to three day counter-trend correction.

On Friday, December U.S. Dollar Index futures settled at 98.775, up 0.010 or +0.01%.

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The greenback actually finished mixed against the individual currencies in the index, with the highly-weighted Euro exerting the most pressure.

The Euro finished 0.20% higher, while the British Pound settled 0.26% lower. The commodity-linked Canadian Dollar finished 0.0029 better. The safe-haven Japanese Yen and Swiss Franc settled mixed with the Yen closing 0.09% lower and the Swiss Franc ending the session 0.27% lower.

Daily December U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, the closing price reversal top may be a sign that the selling is greater than the buying at current price levels.

A trade through 98.630 will confirm the closing price reversal top. This could trigger a two to three day counter-trend break. A move through 98.955 will negate the closing price reversal top and signal a resumption of the uptrend.

The short-term range 97.560 to 98.955. Its 50% level or pivot at 98.260 is the first downside target.

The intermediate range is 96.960 to 98.955. Its retracement zone at 97.960 to 97.720 is the last support before the main bottom at 97.560.


Daily Swing Chart Technical Forecast

Based on Friday’s closing price reversal top and the close at 98.775, the direction of the December U.S. Dollar Index on Monday is likely to be determined by trader reaction to 98.630.

Bearish Scenario

A sustained move under 98.630 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the short-term 50% level at 98.260.

Bullish Scenario

The inability to take out 98.630 will be the first sign of buyers. Taking out 98.955 will negate the potentially bearish chart pattern. This could trigger an acceleration to the upside with the next major target the January 3, 2017 main top at 100.055.

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