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US Dollar Index (DX) Futures Technical Analysis – August 26, 2015 Forecast

By:
James Hyerczyk
Published: Aug 26, 2015, 05:31 UTC

September U.S. Dollar futures closed higher on Tuesday after foreign currency markets were crushed by the early recovery in the U.S. equity markets.

Daily September U.S. Dollar Index

September U.S. Dollar futures closed higher on Tuesday after foreign currency markets were crushed by the early recovery in the U.S. equity markets.

Despite the higher close, we’re still in an environment of uncertainty as to the direction of the global stock markets and investor appetite for risk so traders should continue to look for extreme volatility. On Tuesday, the People’s Bank of China temporarily put a halt to the selling pressure in the equity markets when it cut its key lending rate. This told investors that the PBOC is aware of the situation in Chinese equity markets, however, the price action suggests that investors want to see more aggressive action.

Daily September U.S. Dollar Index
Daily September U.S. Dollar Index

Technically, the main trend is down according to the daily swing chart. However, momentum may be shifting to the upside. Earlier in the week, the index traded down to 92.52. This price fell inside a major retracement zone bounded by 93.38 to 91.44 and slightly above the January 12 bottom at 92.50. All of these prices are potential support today.

Crossing to the weak side of a steep downtrending angle at 91.93 today and sustaining the move will put the index in an extremely bearish position. The Fib level at 91.44 is also a potential trigger point for a steep sell-off.

Holding the 50% level at 93.38 will indicate the presence of buyers. This could create enough upside momentum to challenge a downtrending angle at 95.18.

A new short-term range may be forming between 98.425 and 92.52. If the rally continues through 95.18 then look for the move to extend into the retracement zone at 95.47 to 96.17.

Watch the price action and read the order flow at 93.38 today. This will tell us whether the bulls or the bears are in control. 

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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