US Dollar Index (DX) Futures Technical Analysis – October 23, 2014 Forecast

December U.S. Dollar Index futures rallied sharply higher on Wednesday after consolidating for four days. The strong close has the index in a positon to challenge the recent main top at 86.13. Taking out this price level with conviction will turn the main trend to up on the daily chart.

The short-term range is 86.13 to 84.525. The mid-point of this range provided support yesterday.

The main range is 86.87 to 84.525. Its retracement zone at 85.70 to 85.97 is currently being tested and could become resistance if the buyers fail to show up today.  A downtrending angle from the top at 86.87 comes in at 86.00, forming the best upside target with the Fibonacci level at 85.97.

Watch the price action and order flow if 85.97 to 86.00 is tested. This zone can either be resistance, or a powerful breakout zone.

If there is a breakout over 86.00 then look for the rally to continue into 86.43. This is the last potential resistance angle before the main top at 86.87.

If 85.97 to 86.00 stops the rally then look for a break back to 85.70. The market could accelerate to the downside if this price level fails with a possible target 85.33. The nearest uptrending Gann angle support comes in today at 84.95.

The tone of the day today will be determined by trader reaction to 85.97 to 86.00.