U.S. Dollar Index Futures (DX) Technical Analysis – Upside Bias Could Strengthen on Sustained Move Over 97.305

Uncertainty over Brexit and value-seeking buyers are helping to support the U.S. Dollar against a basket of currencies on Wednesday. The biggest influence of the greenback’s strength is the weaker Euro and the British Pound. This is understandable since they will be most affected by the outcome of the Brexit vote.

The greenback is also trading slightly higher against the Canadian Dollar. The dollar is trading mixed against the safe-haven Swiss Franc and Japanese Yen. The dollar is trading higher against the Swiss Franc, and lower versus the Japanese Yen. The franc is weakening because of its close ties to the Euro Zone economy. The yen is attracting buyers because of a drop in demand for risky assets.

At 12:43 GMT, the December U.S. Dollar Index is trading 97.280, up 0.024 or +0.02%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum shifted to the upside with the formation of the closing price reversal bottom at 96.885 on October 21, and its subsequent confirmation.

The chart pattern doesn’t indicate a change in trend, but it could trigger the start of a meaningful short-covering rally. A trade through 96.885 will negate the reversal bottom and signal a resumption of the downtrend.

The main range is 94.975 to 99.305. Its retracement zone at 97.140 to 96.630 is support. This zone stopped the selling on Monday at 96.885.

The new minor range is 99.305 to 96.885. Its retracement zone at 98.095 to 98.380 is the next potential upside target.

Daily Technical Forecast

Based on the early price action and the current price at 97.280, the direction of the December U.S. Dollar Index the rest of the session on Wednesday is likely to be determined by trader reaction to the downtrending Gann angle at 97.305.

Bullish Scenario

A sustained move over 97.305 will indicate the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into the uptrending Gann angle at 97.570.

The angle at 97.570 is a potential trigger point for an acceleration to the upside with the 50% level at 98.095 the next likely upside target.

Bearish Scenario

A sustained move under 97.305 will signal the presence of sellers. This could lead to a test of the main 50% level at 97.140. If this fails then the selling may extend into this week’s low at 96.885.