US Dollar Index (DX) Futures Technical Analysis – December 5, 2016 Forecast

The December U.S. Dollar Index futures contract is trading well off its high at 101.80 after a dramatic turnaround by the Euro. Earlier in the session, the index gapped higher in response to the Italian Referendum results and the apparent resignation of the Italian Prime Minister. The news drove the Euro into a 20-month low against the Dollar.

Technical Analysis

The main trend is down according to the daily swing chart. The trend will turn up on a trade through the 101.880 swing top. A move through 100.675 will signal a resumption of the downtrend.

The main range is 95.905 to 102.120. If there is a sell-off through 100.675 then we could see an acceleration into its retracement zone at 99.01 to 98.28.

Based on the current price at 100.985 and the earlier price action, the direction of the index today is likely to be determined by trader reaction to the downtrending angle at 101.23.

A sustained move under 101.23 will signal the presence of sellers. The first target is a pair of angles at 100.41 and 100.35. There may be a technical bounce on the first test of 100.41. Crossing to the weak side of the downtrending angle at 100.35 will indicate the selling pressure is getting stronger.

The daily chart is wide open under 100.35 so we could see the start of an acceleration to the downside. The next major target is the main 50% level at 99.01.

Overtaking 101.23 will indicate the presence of buyers. This could create enough upside momentum to challenge the next downtrending angle at 101.66. Overtaking this angle will put the index in a position to challenge today’s intraday high at 101.80 and the main top at 101.880. This is followed by the next main top at 102.120. Taking out this level will send the dollar to a new multi-year high.

Watch the price action and read the order flow at 101.23 today. Trader reaction to this angle will tell us if the buyers have returned or if the sellers are increasing their pressure.