US Dollar Index (DX) Futures Technical Analysis – January 21, 2016 Forecast

March U.S. Dollar Index futures are trading slightly lower shortly before the cash market opening. The early price action suggests trader indecision. The market is also trading inside the major retracement zone defined as 98.96 to 99.37. It has been trading inside this zone for several days. This indicates investor indecision. However, investor reaction to this zone will determine the longer-term direction of the market.

Based on the current price at 99.135, the direction of the market today will be determined by trader reaction to the uptrending angle at 99.14.

A sustained move over 99.14 will signal the presence of buyers. This could create enough upside momentum to challenge the major Fib level at 99.37 and the double top at 99.395. This area is followed closely by a downtrending angle at 99.41. Let’s call it a resistance cluster at 99.37 to 99.41.

The angle at 99.41 is also the trigger point for an acceleration to the upside with the next major target coming in at 99.58. This is the last potential resistance angle before the 99.75 main top.

The inability to overcome 99.14 will indicate the presence of sellers. The early break will be labored because of potential support at 99.06 and 98.96.

The major 50% level at 98.96 is also a trigger point for a steep sell-off with the next target a short-term retracement zone at 98.77 to 98.62. Yesterday’s low fell inside this zone at 98.68.

Taking out 98.62 will put the index in a bearish position.                                          

Watch the price action and read the order flow at 99.14 today. Trader reaction to this angle will determine the direction of the market today.