US Dollar Index (DX) Futures Technical Analysis – Bullish Over 94.42, Bearish Under 93.87

On Friday, the index closed above the November 14 top at 93.87, but under the 94.42 top from November 7. Trader reaction to these levels will likely determine if the uptrend continues, or if the index starts to form a short-term top.
James Hyerczyk
U.S. Dollar Index
U.S. Dollar Index

The U.S. Dollar closed higher against a basket of currencies on Friday, bolstered by a weaker Euro and commodity-linked currencies like the Australian and Canadian Dollars. The Euro was pressured by political turmoil in Italy and Spain. A steep drop in crude oil futures drove the Aussie and Loonie sharply lower. Gains were likely limited by a drop in U.S. Treasury yields and weak pre-holiday volume.

June U.S. Dollar Index futures settled at 94.13, up 0.429 or +0.46%.

Daily June U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. Currently, the market is up nine sessions from its most recent main bottom. This puts it in the window of time for a potentially bearish closing price reversal top.

This chart pattern does not mean the trend is getting ready to turn down, but it could lead to the start of a 2 to 3 day correction.

The minor trend is also up. A trade through 93.20 will change the minor trend to down. This will also shift momentum to the downside.

Daily Swing Chart Technical Forecast

On Friday, the index closed above the November 14 top at 93.87, but under the 94.42 top from November 7. Trader reaction to these levels will likely determine if the uptrend continues, or if the index starts to form a short-term top.

A sustained move over 94.42 will indicate the buying is getting stronger. If this generates enough upside momentum, we could see an eventual rally into the July 5 top at 95.55.

A sustained move under 93.87 will signal the presence of sellers. It will also indicate that Friday’s rally was likely fueled by short-covering rather than new buying. This could trigger a break into 93.35 then 93.20.

Look for an acceleration to the downside if 93.20 is taken out with strong volume. This could trigger a move into 92.30 and 92.12.

The index is currently trading on the bullish side of a pair of retracement zones at 93.35 to 92.30 and 91.90 to 91.12. Holding above these zone is helping to give the index a longer-term bullish outlook.

The combination of the two zones makes 92.30 to 91.90 the key support area. Inside this support area is the main bottom at 92.12. If this area fails then the bullish sentiment will change.

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