March U.S. Dollar Index futures are trading higher shortly before the regular session opening. The index has been rangebound since January 5 when it posted a high at 102.500 and a low at 101.295. Holding inside this range indicates investor indecision and impending volatility. If there is volatility today, then it is likely to arrive with President-elect Donald Trump’s first press conference since he was elected at 1600 GMT.
The main trend is down according to the daily swing chart. A trade through 101.295 will signal a resumption of the downtrend with the next target bottom coming in at 100.635. Buyers will have to take out 103.815 to turn the main trend to up, but momentum will trend higher before then.
The main range is 99.250 to 103.815. Its retracement zone is 101.555 to 100.995. This zone provided support last week when the selling stopped at 101.295. It should still be considered support.
The short-term range is 103.815 to 101.295. Its retracement zone at 102.565 to 102.850 is the primary upside target. Since the main trend is down, sellers may show up on a test of this zone. So prepare for a technical bounce. Overtaking the zone will shift momentum to the upside.
Based on the current price at 102.225, the direction of the dollar index today will likely be determined by trader reaction to the downtrending angle at 102.315 and the uptrending angle at 102.000.
A sustained move over 102.315 will indicate the presence of buyers. This could trigger a stair-step rally with potential targets at 102.565, 102.850 and 103.065. The latter is the trigger point for an acceleration to the upside with the next target angle coming in at 103.440.
Taking out 102.000 will signal the presence of sellers. The daily chart is open to the downside with the next target the major 50% level at 101.535. This is followed by last week’s low at 101.295 and the main Fibonacci level at 100.995.
The daily chart opens up to the downside under 100.995 with potential targets coming in at 100.635 and 100.625.