US Dollar Index (DX) Futures Technical Analysis – October 1, 2014 Forecast

December U.S. Dollar Index futures continued its rally on Tuesday, reaching its highest level since September 2010.

The next target is a steep uptrending angle on the weekly chart at 86.39. Overtaking this angle will put the index in an extremely strong position. The best target on the monthly chart is a major Fibonacci level at 87.31.

The best support remains the uptrending angle from the 82.45 bottom at 85.45. This angle has provided support and guidance since August 28, or 23 trading sessions.  

Because of the prolonged move in terms of price and time, the index is still vulnerable to a potentially bearish closing price reversal top. Even if a higher-high, lower-close takes place, there will still have to be a follow-through move to confirm the chart pattern. The rally is so strong that two closing price reversal tops have failed over the past nine days because of the lack of follow-through to the downside.

Look for the uptrend to continue today, but we aware of the possibility of a reversal to the downside especially since traders like to pare positions ahead of the U.S. Non-Farm Payrolls Report.