US Dollar Index (DX) Futures Technical Analysis – October 10, 2014 Forecast

The December U.S. Dollar Index rebounded from early session weakness on Thursday, posting a potentially bullish closing price reversal bottom. A trade through 85.785 will confirm the chart pattern. Typically, this chart pattern leads to a test of the retracement zone formed by the last break. Since this zone comes in at 85.94 to 86.16, the upside potential may be limited.

The first key angle to watch is 85.62. The market essentially closed over this angle on Thursday, putting it in a good position to open better today. This could lead to an almost immediate test of the retracement zone target.

The next two angles drop in at 86.24 and 86.56.

Trader reaction to the retracement zone at 85.94 to 86.16 should set the tone the rest of the session. If sellers stop the rally inside this zone then look for selling pressure into the close.

A break through 85.015 will negate the reversal bottom and could trigger a resumption of the break into the major downside target at 84.66 to 84.14.