US Dollar Index Forecast November 17, 2015, Technical Analysis

The US Dollar Index gapped higher at the open on Monday, and then turned back around to fill that gap. This was probably in reaction to the terrorist attacks in Paris on Friday night, but quite frankly this goes along with the overall attitude and trend of this market anyway. Because of this, the buyers stepped in after the gap was filled, and ended up pushing this market into a hammer by the end of the day. The hammer of course is a very bullish sign, and a break above the 99.50 level looks imminent. Once we get above there, the market should then reach towards the 100 level given enough time.

Ultimately, you have to keep in mind that the 100 level is of course a large, round, psychologically significant number of the highest order, meaning that the markets will more than likely find a lot of interest and resistance in that barrier. However, I believe that eventually this market breaks out above there and continues to go much higher.

This is represented by an impulsive move towards the 99.50 level, and then the relatively short pullback. The fact that we cannot fall significantly after crashing into that barrier suggests that there is more than enough pressure underneath to continue to drive this market to the upside.

It’s not necessarily that we feel there is going to be a massive “melt up” in the US dollar soon, it’s just that there are a lot of questions and uncertainty to be found around the world. The USD/JPY, EUR/USD, USD/CAD, and USD/CHF pairs all suggests that the US dollar is going to continue to strengthen overall. In fact, those for pairs are reason enough to suspect that this contract will continue to the upside.

Ultimately, there are different ways to play the US Dollar Index, and we suggest using options as the volatility will be pretty rough until we get above the 100 handle. You can also use CFD markets, but using the actual futures contracts might be a bit difficult at this point in time as the volatility will be difficult to stomach. Again though, once we break the 100 level, that market might be doable as well.