US Dollar Index (DX) Futures Technical Analysis – February 20, 2017 Forecast

March U.S. Dollar Index futures are trading higher early in the session. The range is tight, however, and the volume is relatively low. It is expected to remain low throughout the session because today is a U.S. bank holiday. However, you should continue to watch for volatility spikes. U.S. Treasury markets are also closed so traders will have nothing to guide their decision process. So if there is any movement today, it will likely be a news driven event.

Technical Analysis

The main trend is up according to the daily swing chart. However, momentum shifted to the downside with the formation of the closing price reversal top on February 15 and the subsequent follow-through to the downside.

A trade through 101.75 will negate the closing price reversal top and signal a resumption of the uptrend. A trade through 100.40 will indicate the downside momentum is increasing.

The main range is 103.815 to 99.195. Its retracement zone at 101.505 to 102.050 is the primary upside target and resistance area. It stopped the rally last week at 101.75.

The short-term range is 99.195 to 101.75. Its retracement zone at 100.47 to 100.17 is the primary downside target. This zone stopped the selling last week when the market reached a low at 100.40.

Bearish traders will try to produce a potentially bearish secondary lower top inside 101.505 to 102.05 and bullish traders will try to produce a potentially bullish secondary higher bottom inside 100.47 to 100.17. If the volume is strong enough on each side, the index will sit in range, bounded by 101.505 and 100.47.

Forecast

Based on Friday’s close at 100.951, the direction of the index today will be determined by trader reaction to the downtrending angle at 101.00 and the uptrending angle at 100.70.

A sustained move over 101.00 will indicate the presence of buyers. This could trigger an acceleration into a downtrending angle at 101.38. This is followed by a resistance cluster at 101.505 to 101.56.

A sustained move under 100.70 will signal the presence of sellers. This could generate enough downside momentum to challenge the 50% level at 100.47, last week’s low at 100.40 and the Fibonacci level at 100.171.

We’re expecting low volume today so be careful buying strength and selling weakness. Look for an upside bias to begin on a sustained move over 101.00 and a downside bias on a sustained move under 100.70. Breakout will work best if there is volume behind them so make sure you watch the price action and read the order flow.