US Dollar Index (DX) Futures Technical Analysis – August 25, 2016 Forecast

September U.S. Dollar Index futures are trading lower and inside yesterday’s range as investors await the latest information on U.S. Durable goods. While not a major report, we could see some volatility if the number misses its mark especially since trading conditions are thin. Most investors are waiting for Fed Chair Janet Yellen’s speech on Friday.

Technically, the main trend is down according to the daily swing chart. However, the index has been drifting sideways-to-higher since August 18. The index is far from turning the main trend to up, but there is room to the upside to complete a retracement of the current break. A trade through 94.05 will signal a resumption of the downtrend.

The main range is 93.025 to 97.62. Its retracement zone is 95.32 to 94.78. Trading below this zone will reaffirm the downside bias. Today, the index is testing the lower or Fibonacci level at 94.78.

The short-term range is 96.50 to 94.05. Its retracement zone is 95.28 to 95.56. This zone is the primary upside target.

Based on the early price action, the first resistance is a downtrending angle at 94.75. This is followed closely by the main Fib level at 94.78. These two levels form a key resistance cluster. Look for a technical bounce on the first test of this zone, but be prepared for an acceleration to the upside if 94.78 is taken out with rising volume. The next major upside target over this price is a pair of 50% levels at 95.28 to 95.32.

The inability to overcome 94.75 to 94.78 will signal the presence of sellers. The first downside target is a long-term uptrending angle at 94.43. The daily chart opens up to the downside under 94.43 with the next target the minor bottom at 94.05. This is followed by a long-term uptrending angle at 93.73.

Watch the price action and read the order flow at 94.74 and 94.78 today. Look for an upside bias on a sustained move over 94.78 and a downside bias on a sustained move under 94.74.