US Dollar Index (DX) Futures Technical Analysis – Building Support Base, but Facing Wall of Resistance

March U.S. Dollar Index futures closed higher on Friday, but inside the previous day’s range. This tends to indicate investor indecision and impending volatility. The market is trading in a position where buyers will either continue the rally by taking out a closing price reversal top, or sellers will confirm the potentially bearish chart pattern and drive prices lower over the short-run.

Daily Technical Analysis

The main trend is down according to the daily swing chart. Short-term momentum is trending higher, however.

The formation of a closing price reversal top at 90.17 may be an indication that momentum is getting ready to shift to the downside. This chart pattern will be confirmed by a trade through 89.56. This could lead to the start of a 2 to 3 day correction into at least 89.16 to 88.92.

A trade through 90.17 will negate the closing price reversal top. This could generate the upside momentum needed to challenge the main top at 90.455. The main trend will change to up on a trade through this level. This could lead to a quick test of another main top at 90.765. Overtaking this main top will reaffirm the uptrend. This is also the trigger point for a potential acceleration to the upside.

The intermediate range is 92.36 to 88.15. Its retracement zone at 90.255 to 90.75 is the next upside target. It could act as resistance.

The main range is 93.825 to 88.15. A breakout to the upside could lead to a test of its retracement zone at 90.99 to 91.66. This is also a potential resistance area. However, overcoming this zone could signal the start of a powerful rally.

Daily Technical Forecast

Based on Friday’s close at 89.81, the direction of the market on Monday is likely to be determined by trader reaction to 90.17 and 89.56.

Taking out 90.17 with rising volume could trigger the start of a labored rally. Near-term resistance includes retracement levels at 90.255, 90.752 and 90.99. Downtrending Gann angle resistance is 90.36 and 90.70.

After clawing through resistance from 90.255 to 90.99, the index could finally be in a position to accelerate to the upside over 90.99. This is a possible trigger point for an acceleration into 91.657.

The index appears to be trying to form a support base, but it’s going to take a combination of short-covering and aggressive counter-trend buying to generate the upside momentum needed to trigger a change in the trend to up and an acceleration to the upside.