US Dollar Index (DX) Futures Technical Analysis – January 16, 2017 Forecast

March U.S. Dollar index futures are trading higher shortly before the regular session opening. Although the index gapped higher on the opening, it remains inside Friday’s range. Additionally, the intraday range is extremely tight. This may be due to low volume and volatility because of the U.S. bank holiday.

Technical Analysis

The main trend is down according to the daily swing chart. The index is posting an inside move for the second consecutive day. This indicates investor indecision and impending volatility. This could lead to a low volume spike today.

The trend is far from turning higher, but a trade through 100.700 will signal a resumption of the uptrend.

The main range is 99.250 to 103.815. Its retracement zone is 101.533 to 100.904. The market is trying to consolidate and build a support base inside this zone. This zone is also controlling the longer-term trend.

The new short-term range is 103.815 to 100.700. Its retracement zone at 102.258 to 102.625 is the primary upside target. Since the trend is down, we may see a technical bounce on the initial test.

Forecast

Based on the current price at 101.485, the direction of the dollar index today is likely to be determined by trader reaction to the resistance cluster at 101.533 to 101.565.

A sustained move over 101.565 will signal the presence of buyers. If volume comes in, we could see an acceleration to the upside with the next target the short-term 50% level at 102.258.

A sustained move under 101.533 will indicate the presence of sellers. The daily chart is open to the downside under this level so if selling volume increases we could see a move into the short-term Fibonacci level at 100.994, followed closely by an uptrending angle at 100.813. This angle stopped the break last week.

Look for an upside bias on a sustained move over 101.565 and a downside bias on a sustained move under 101.533.