US Dollar Index (DX) Futures Technical Analysis – Has to Sustain Move Over 94.42 or Short-term Top Will Form
The U.S. Dollar moved higher early in the session on Monday before retreating to unchanged for the session. Early in the day, the index was supported by a plunge to a 6 ½ month low in the Euro and an easing of geopolitical concerns over North Korea.
June U.S. Dollar Index futures finished at 94.13, unchanged from Friday’s close.
Volume was well-below average on Monday because of U.S. and U.K. bank holidays.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. Monday’s move took out the November 7 top at 94.42 without much fanfare, probably because the buying volume was so light. A trade through 94.435 on Tuesday will reaffirm the uptrend.
The minor trend is also up. A trade through 93.20 will change the minor trend to down. This will also shift momentum to the downside.
Monday’s close was inside a pair of former tops at 93.87 and 94.42. The index also continued to close on the bullish side of a major retracement zone at 93.35 to 92.30. This area is controlling the longer-term direction of the market. It should be considered support.
Another retracement zone and support area is 91.90 to 91.13.
Tuesday is also the 11th day up from the last main bottom. This puts the index in the window of time for a closing price reversal top. A rally of this size and duration often ends with a dramatic closing price reversal top.
Daily Swing Chart Technical Forecast
Based on Monday’s limited price action, the direction of the index on Tuesday is likely to be determined by trader reaction to the November 14 top at 93.87.
A sustained move over 93.87 will indicate the presence of buyers. If this generates enough upside momentum then buyers are likely to make a run at yesterday’s high at 94.435. Breaking out above this level will also put the index on the bullish side of the November 7 top at 94.42. This could trigger an acceleration to the upside with 95.55 the next major upside target.
A sustained move under 93.87 will signal the presence of sellers. This could lead to a move into the Fib level at 93.35 then the minor bottom at 93.20.
Taking out 93.20 will change the minor trend to down and shift momentum to the downside. This could also trigger an acceleration to the downside with 92.30 the next major target.
The dollar index has to breakout over 94.42 and sustain the move, or a short-term top will start forming.
This article was originally posted on FX Empire