US Dollar Index (DX) Futures Technical Analysis – February 23, 2017 Forecast

March U.S. Dollar Index futures are trading lower shortly before the regular session opening. The weakness suggests that investors don’t believe the Fed will raise rates at its March 15 meeting despite suggesting in the minutes of its February monetary policy meeting that the policies of President Trump could lead to a rate hike “fairly soon.”

Technical Analysis

The main trend is up according to the daily swing chart, however, yesterday’s high at 101.715 and the subsequent sell-off suggest that momentum may be shifting to the downside and that a secondary lower top main be forming.

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 turn the minor trend to down. The main trend will turn down on a move through 99.195.

The main range is 103.815 to 99.195. Its retracement zone is 101.505 to 102.050. This zone stopped the rallies at 101.75 and 101.715. It seems to be controlling the longer-term direction of the market.

The new short-term range is 99.195 to 101.75. Its retracement zone at 100.473 to 100.171 is the primary downside target.

Forecast

Based on the current price at 101.140, the direction of the U.S. Dollar Index the rest of the session is likely to be determined by trader reaction to the uptrending angle at 101.07.

Holding 101.07 will indicate that buyers are coming in to defend the uptrend. This could create enough upside momentum to challenge the resistance cluster at 101.505 to 101.570.

Overtaking 101.570 could trigger a breakout rally into 101.715 to 101.750. This is followed by the main Fibonacci level at 102.050.

Breaking the angle at 101.07 could trigger an acceleration to the downside with the next major target coming in at 100.473 to 100.40.

Watch the price action and read the order flow at 101.07. Trader reaction to this angle will tell us if the buyers are coming back in to support the rally, or if sellers are taking control.