US Dollar Index (DX) Futures Technical Analysis – October 3, 2014 Forecast

Traders lightened up on their long positions on Thursday ahead of today’s major U.S. Non-Farm Payrolls report. This led to the sell-off that threatened the major uptrending angle that had held as support since the 82.45 bottom on August 28. Taking this angle with conviction would trigger a massive sell-off since the daily chart indicates there is room to fall all the way back to 84.39 to 83.93.

The first minor resistance level is this week’s high at 86.335. Taking out this price with conviction could trigger a huge rally since the nearest resistance is a Fibonacci level on the monthly chart at 87.31.

This is not expected to be a typical trading session. Look for increased volatility and a possible two-sided trade, following the release of the U.S. September Non-Farm Payrolls report at 8:30 a.m. ET. Traders are looking for a reading of 215K. A greater-than-expected number will drive up interest rates, making the U.S. Dollar a more attractive investment.

Traders should note that the market is trading lower for the week. If it finishes this way then a potentially bearish closing price reversal top will form on the weekly chart. This could trigger the start of a 2 to 3 week correction.

Trader reaction to the U.S. jobs report and to the major uptrending angle at 85.70 will set the tone and direction for the day.