US Dollar Index (DX) Futures Technical Analysis – October 9, 2014 Forecast

The December U.S. Dollar Index took out a major uptrending support angle with conviction on Wednesday, triggering a sharp break. The catalyst behind the move was somewhat dovish comments by the Fed in its latest minutes from the September monetary policy committee meeting. While the minutes may not be enough to change the main trend to down on the daily chart, they have certainly given long investors a good enough excuse to pare positions and take profits. This is likely to trigger a short-term break into a value zone.

The main range is 82.45 to 86.87. The retracement zone formed by this range at 84.66 to 84.14 is the next likely downside target. Since the main trend is up on the daily chart, buyers may treat this area as a value zone so be prepared for a technical bounce if this area is tested.

Breaking the long-term uptrending trending angle at 86.20 today then failing to overtake it early in the session was the first sign of weakness. This could create enough downside momentum to challenge a pair of uptrending angles at 84.33 and 84.32. These angle pass through the retracement zone, making them valid downside targets.

On the upside, the first resistance angle drops in at 85.87, followed by additional angles at 86.37 and 86.62.

Based on the momentum at the close, look for an early downside bias. The daily chart indicates the index has a clean shot at reaching at least the 50% level at 84.67 over the near-term. Look for weakness as long as 85.87 holds as resistance.