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US Dollar Index (DX) Futures Technical Analysis – Breaking Out Over 10-Week Trading Range

By:
James Hyerczyk
Published: Apr 23, 2018, 12:33 UTC

Based on the early price action, the direction of the index the rest of the week will be determined by whether buyers can hold the index above the previous top of the range at 90.490.

U.S. Dollar Index

A sharp rise in Treasury yields is driving June U.S. Dollar Index futures sharply higher on Monday. After a steady opening, the dollar rose to a seven-week high against a basket of currencies with the Euro and Japanese Yen getting hit the hardest. The move is being fueled by a move in the 10-year Treasury yield to 2.99%, just shy of the psychological 3.00% level.

U.S. Dollar Index
Weekly June U.S. Dollar Index

Weekly Swing Chart Technical Analysis

The main trend is down according to the weekly swing chart, but momentum has shifted to the upside. After trading inside a range for 10-weeks, the dollar index crossed the high reached the week-ending March 2 at 90.49. This signaled a shift in investor sentiment and momentum.

The minor trend is up. It turned up when buyers took out 90.295. It was reaffirmed when the rally continued through 90.490. The new higher minor bottom is 88.945. The trend will change to down on a move through this price level.

The rally could begin to slow as the index faces layers of potential resistance levels. The first upside target is a minor 50% level at 90.655. This is followed by an intermediate 50% level at 91.125, followed closely by the minor Fibonacci level at 91.322.

The rally begins to pick up steam over 91.322 with the next target the intermediate Fibonacci level at 91.903.

The main range is 96.772 to 87.830. Its retracement zone at 92.301 to 93.356 is the primary upside target.

Weekly Swing Chart Technical Forecast

Based on the early price action, the direction of the index the rest of the week will be determined by whether buyers can hold the index above the previous top of the range at 90.490.

A sustained move over 90.490 will indicate the presence of buyers. Although they face layers of potential resistance, the upside momentum created by the move over this level should lead to higher prices throughout the week as each potential resistance layer falls.

The inability to sustain a move over 90.490 will signal the return of sellers. It won’t necessarily mean the end of the rally, but may be designed to alleviate some of the upside pressure. This could lead to a short-term correction into support which would give bullish traders a better entry level. Buyers can continue to buy strength, or play for a pullback into 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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