US Dollar Index (DX) Futures Technical Analysis – April 26, 2017 Forecast

June U.S. Dollar Index futures are showing signs of bottoming, or at least forming a minor bottom. Hardly enough to get too excited about, but it does mean there are still buyers out there.

Technical Analysis

The main trend is still down according to the daily swing chart. The down trend was reaffirmed on Tuesday when the index broke through the March 27 main bottom at 98.67. The market reached only 98.565 before the selling stopped and the buyers came in. This indicates that the last wave of selling was likely the weakest longs getting stopped out. This often indicates exhaustion.

Today is also the 11^th day down from the last main top on April 10. This put it in the window of time for the start of a 2 to 3 day counter-trend rally.

The index is now back inside a major retracement zone bounded by 99.75 on the upside and 98.81 on the downside. Holding above the bottom will also be indicative of the presence of buyers.

Forecast

The direction of the dollar index today is likely to be determined by trader reaction to the Fib level at 98.81.

A sustained move over 98.81 will signal the presence of buyers. I don’t think it’s going to be bottom-pickers that gets this market moving on the first leg up, but probably profit-taking and short-covering.

If they can generate enough upside momentum, or if there is enough good news then perhaps we will see a drive towards the nearest upside targets at 99.75 and 99.89.

A break back below the Fib at 98.81 will indicate that the buying is weak and that the short-sellers are back. The first target is yesterday’s low at 98.56 then a steep downtrending angle at 98.52.

Crossing to the weak side of the downtrending angle at 98.52 will put the index in a bearish position.

Look for an upside bias to develop today on a sustained move over 98.81 and for the downside bias to resume on a sustained move under this level.