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US Dollar Index (DX) Futures Technical Analysis – Aggressive Counter-Trend Sellers Will Try to Stop Rally at 94.33 to 94.48

By:
James Hyerczyk
Published: Jun 3, 2018, 06:11 UTC

Based on Friday’s price action, the direction of the June U.S. Dollar Index is likely to be determined by trader reaction to the 50% level at 94.33.

US Dollar

The U.S. Dollar rose against a basket of currencies on Friday in reaction to stronger-than-expected U.S. jobs data. The news solidified a June interest rate hike by the Fed, and raised the odds of additional rate hikes later this year. This made the dollar a more attractive investment since it also helped U.S. Treasury yields rebound from early weakness.

June U.S. Dollar Index futures settled at 94.169, up 0.119 or +0.13%.

Friday’s strength also helped the dollar claw back losses encountered earlier in the week when political tensions in Italy eased. This pushed the dollar index positive for the week.

U.S. Dollar Index
Daily June U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The two-day setback last week helped make 94.975 a new main top. A trade through 94.975 will signal a resumption of the downtrend. A move through 93.69 will indicate the selling is getting stronger.

The minor trend is also up. A trade through 93.69 will change the minor trend to down. This will also shift momentum to the downside.

The main range is 92.115 to 94.975. Its retracement zone at 93.545 to 93.21 is the primary downside target. A major Fibonacci level passes through this zone at 93.35, making it a valid downside target. Since the main trend is up, buyers are likely to come in on a test of this area.

The short-term range is 94.975 to 93.69. Its retracement zone is 94.33 to 94.48. This zone rejected the index on Friday. This area is very important to the structure of the chart pattern. Aggressive, counter-trend sellers are going to try to stop the rally on a test of this zone. They are going to try to form a secondary lower top.

Buyers are going to try to take out 94.48 in an effort to make 93.69 a new main bottom.

Daily Swing Chart Technical Forecast

Based on Friday’s price action, the direction of the June U.S. Dollar Index is likely to be determined by trader reaction to the 50% level at 94.33.

A sustained move over 94.33 will indicate the presence of buyers. Overtaking 94.48 will indicate the buying is getting stronger. If this move generate enough upside momentum, we could see a retest of 94.975.

A sustained move under 94.33 will signal the presence of sellers. This could fuel a retest of 93.69 and an eventual test of the series of retracement levels at 93.545, 93.35 and 93.21, followed by the minor bottom at 93.20.

Momentum changes to down if 93.20 fails as support.

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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