US Dollar Index (DX) Futures Technical Analysis – Taking Out 89.25 Will Confirm Yesterday’s Closing Price Reversal Bottom
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The U.S. Dollar rose against a basket of major currencies on Tuesday, especially the Euro as trade tensions receded and the greenback received support from month-end flows. Traders were primarily reacting to reports that the United States and China would begin negotiations over trade issues.
June U.S. Dollar Index futures settled at 88.983, up 0.379 or +0.43%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart, however, momentum may have shifted to the upside with the formation of the closing price reversal bottom.
A trade through 89.25 will confirm the reversal bottom. This doesn’t mean the trend is turning higher but it will indicate the buying is greater than the selling at current price levels. A trade through 90.025 will change the main trend to up.
A move through 88.530 will negate the closing price reversal bottom and signal a resumption of the downtrend with the next major downside target coming in at 87.830.
The main range is 87.830 to 90.490. Its retracement zone is 89.160 to 88.85. The index straddled this zone on Tuesday and closed inside it. Trader reaction to this zone is likely to determine the longer-term direction of the index.
The short-term range is 90.025 to 88.530. If the rally continues then its retracement zone at 89.28 to 89.45 will become the first upside target. Since the main trend is down, sellers could come in on the first test of this area.
The intermediate range is 90.49 to 88.53. Its retracement zone at 89.51 to 89.74 will be the next upside target.
The best upside target is a combination of the short-term Fib level at 89.45 and the intermediate 50% level at 89.51.
Daily Swing Chart Technical Forecast
Based on Tuesday’s close at 88.983 and the price action, the direction of the index early Wednesday is likely to be determined by trader reaction to 88.85 and 89.16.
A sustained move over 89.16 will indicate the presence of buyers. This could fuel a rally into a series of levels at 89.25, 89.28 and the resistance cluster at 89.45 to 89.51.
A sustained move under 89.16 will signal the presence of sellers. This could trigger a steep break into 88.53. Taking out this bottom could trigger an acceleration to the downside with 87.83 the next potential downside target.
This article was originally posted on FX Empire