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US Dollar Index (DX) Futures Technical Analysis – August 9, 2017 Forecast

By:
James Hyerczyk
Updated: Aug 9, 2017, 12:24 UTC

September U.S. Dollar Index futures are trading slightly lower shortly before the regular session opening. The market is trading inside yesterday’s range

US Dollar Index

September U.S. Dollar Index futures are trading slightly lower shortly before the regular session opening. The market is trading inside yesterday’s range which suggests investor indecision and impending volatility.

The index closed higher on Tuesday, but if you actually watched the price action you would know that the index rallied on robust U.S. economic data that slightly increased the chances of a Fed rate hike later in the year, and weakened after investors began shedding higher-risk assets due to increasing tensions between North Korea and the United States.

Based on today’s early price action, the U.S. Dollar is not being treated as a safe-haven asset. It is being treated as a higher-risk, higher-yielding asset. This is important to know.

The safe-haven buying is taking place in the Japanese Yen, gold and the U.S. Treasury markets. It’s pretty simple. When T-Bonds rise, yields go down. When yields go down, the dollar becomes a less attractive investment.

The dollar is not a safe-haven asset today and is likely to continue to weaken if the selling of higher-risk assets like stocks continues. The only reason investors are going to sell stock is if they feel that their investments are at risk. They will then hedge their profits in the safe haven assets.

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

Technical Analysis

The main trend is down according to the daily swing chart. Momentum has shifted to the upside. Momentum will increase when 93.77 is taken out, but the main trend will change to up when buyers take out 94.115.

The short-term range is 94.115 to 92.39. Its retracement zone is 93.46 to 93.25. Holding above this zone will give the market an upside bias. Falling below this area will mean momentum is shifting to the downside.

The main range is 95.96 to 92.39. Its retracement zone at 94.175 to 94.60 is the primary upside target.

Forecast

Based on the current price at 93.515, the direction of the dollar index today is likely to be determined by trader reaction to the short-term Fib at 93.46.

Holding above 93.46 will indicate the presence of buyers. This should drive the market into an uptrending angle at 93.64. Crossing to the strong side of this angle will put the index in a bullish position with the next target 93.77.

Overcoming 93.77 with conviction could drive the index into 94.115 to 94.175.

A sustained move under 94.46 will signal the presence of sellers. This could trigger a break into 93.34 then 93.25.

Look for an acceleration to the downside on a move under 93.25. The next two targets are 93.02 and 92.70. The latter is the last potential support angle before the 92.39 main bottom.

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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