US Dollar Index (DX) Futures Technical Analysis – Could Be Setting Up Weekly Reversal Top
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Increased demand for risky assets and an easing of political tensions in Italy helped drive the U.S. Dollar lower against a basket of currencies. Exerting the most pressure on the dollar index was a sharp recovery in the Euro from a 10-month low reached the previous session.
June U.S. Dollar index futures settled at 94.115, down 0.674 or -0.72%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, momentum may be getting ready to shift to the downside.
Wednesday’s price action made 94.975 a minor top. This move stopped shortly before the July 5, 2017 main top at 95.55. The index closed under the November 7, 2017 main top at 94.42. This is the first sign of weakness because it indicates the price surge on Tuesday may have been fueled by short-covering rather than new buying.
A trade through 93.20 will change the minor trend to down. This will also shift momentum to the downside. The main trend won’t change down unless 92.115 is violated.
The short-term range is 92.115 to 94.975. Its retracement zone at 93.545 to 93.208 is the first downside target. This zone is straddling a major Fib level at 93.349, making it a valid downside target also. Watch for a technical bounce on the first test of this area. It could become a support cluster.
The next target zone is a 50% level at 92.296 and a Fibonacci level at 91.903. This is followed by another 50% level at 91.125.
Daily Swing Chart Technical Forecast
Based on Wednesday’s close at 94.115, the direction of the June U.S. Dollar Index on Thursday is likely to be determined by trader reaction to 94.42.
A sustained move under 94.42 will indicate the presence of sellers. If this generates enough downside momentum then look for the selling to extend into 93.349, followed by 93.20.
Taking out 93.20 will change the minor trend to down as well as the momentum. This could trigger an acceleration into 92.296 to 91.903.
Overtaking and sustaining a move over 94.42 will signal the presence of buyers. This could lead to a retest of 94.975. Taking out this level will signal a resumption of the uptrend with 95.55 the next major target.
Keep an eye on 94.13. The index closed there last Friday. A close below this level today will put the index in a position to post a potentially bearish weekly closing price reversal top.
This article was originally posted on FX Empire