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

By:
James Hyerczyk
Updated: Jan 20, 2017, 13:20 UTC

March U.S. Dollar Index futures are trading higher shortly before the regular session opening. The move could be short-covering ahead of Trump’s

US Dollar Index

March U.S. Dollar Index futures are trading higher shortly before the regular session opening. The move could be short-covering ahead of Trump’s inauguration as President of the United States at 1700 GMT. Without fresh economic data, today’s price action is likely to be news driven.

We could see a rally later today if Trump says something that is perceived as bullish for the economy. This would likely trigger a rise in U.S. Treasury rates, helping to make the dollar a more attractive investment.

U.S. Dollar Index
Daily March U.S. Dollar Index

Technical Analysis

The main trend is down according to the daily swing chart. However, momentum appears to be ready to shift back to the upside. A trade through 100.235 will signal a resumption of the downtrend with the next target bottom coming in at 99.25.

The main range is 99.25 to 103.815. Its retracement zone is 101.535 to 100.995. The market is currently trading inside this zone. Trader reaction to this zone will determine the near-term trend of the market.

The short-term range is 103.815 to 100.235. If there is a rally then its retracement zone at 102.025 to 102.45 will become the primary upside target.

Forecast

Based on the current price at 101.485, the direction of the index today is likely to be determined by trader reaction to the main 50% level at 101.535.

A sustained move over 101.535 will signal the presence of buyers. This could trigger an acceleration to the upside with the next target at 102.025. This is followed by a downtrending angle at 102.32 and the Fibonacci level at 102.45.

The inability to overcome 101.535 will indicate the presence of sellers. The next target is a support cluster at 101.00 to 100.995.

If 100.995 fails as support then look for a test of the downtrending angle at 100.82. This is the trigger point for a possible acceleration into 100.235, followed by 100.13.

Watch the price action and read the order flow at 101.535. Trader reaction to this level will tell us if the buyers or sellers are in control today.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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