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US Dollar Index (DX) Futures Technical Analysis – May 9, 2018 Forecast

By:
James Hyerczyk
Published: May 9, 2018, 07:20 GMT+00:00

The main trend is up according to the daily swing chart. The index is not in a position to change the trend to down, but it is in the window of time for a potentially bearish closing price reversal top. This higher-high, lower-close chart pattern usually indicates the selling is greater than the buying at current price levels.

U.S. Dollar Index

The U.S. Dollar rose against a basket of currencies on Tuesday, driven by safe-haven buying, expectations of higher U.S. interest rates and a weaker Euro.

June U.S. Dollar Index futures settled at 92.96, up 0.366 or +0.39%.

The index is trading slightly higher early Wednesday, but we could see some volatility at 1200 GMT with the release of the U.S. Producer Price Index. Traders are looking for an increase of 0.2%. A higher than expected number could spike the index higher. The index is likely to break if the number misses to the downside.

U.S. Dollar Index
Daily June U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The index is not in a position to change the trend to down, but it is in the window of time for a potentially bearish closing price reversal top. This higher-high, lower-close chart pattern usually indicates the selling is greater than the buying at current price levels.

It’s essentially designed to alleviate the upside pressure and often leads to the start of a 2 to 3 day counter-trend trade.

On the upside, the nearest targets are the December 12, 2017 main top at 93.48, the November 14, 2017 main top at 93.87 and the November 7, 2017 main top at 94.42.

The short-term range is 94.42 to 87.83. Its retracement zone at 91.90 to 91.13 is support.

The contract range is 96.77 to 87.83. The index is currently trading inside its retracement zone at 92.30 to 93.35. Trade reaction to this zone will determine the longer-term direction of the index.

Daily Swing Chart Technical Retracement

The index is trading higher early Wednesday. This price action is being driven by momentum. If the upside momentum continues then look for a test of the Fibonacci level at 93.35, followed closely by the main top at 93.48. Overtaking this level will indicate the buying is getting stronger with additional targets coming in at 93.87 and 94.42.

On the downside support is lined up at 92.30 and 91.90. The index could spike to the downside into 91.12 if 91.90 fails as support.

Taking out yesterday’s high signals a resumption of the uptrend. Breaking back below 92.96 will indicate the buying is getting weak, or the selling is getting strong. This could lead to the formation of a closing price reversal top.

About the Author

James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.

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