US Dollar Index (DX) Futures Technical Analysis – Needs Major Change in Investor Sentiment to Turn Bullish
September U.S. Dollar Index futures started the week with a surge as investors continued to respond to the U.S. Federal Reserve’s interest rate hike and hawkish monetary policy statement from the week before.
Bullish investors gave back most of their gains by the close on Friday as investors expressed doubts about the Fed’s ability to raise interest rates later in the year. The steep drop in crude oil futures last week raised concerns over inflation. Weaker-than-expected U.S. economic data also weighed on the dollar index. Fed speakers were mixed, which could suggest a growing division inside the Fed.
Technical Analysis
The daily chart looks a little choppy and too much noise makes it difficult to see the big picture so we’re going to take a look at the weekly chart.
The main trend is down according to the weekly swing chart. It will turn up on a trade through 99.565. In the meantime, any rallies are going to be short-covering and counter-trend moves.
Last week’s price action made 96.02 a new minor swing bottom. A trade through this level will signal a resumption of the downtrend with 95.80 the next likely target.
The short-term range is 99.565 to 96.02. Its retracement zone at 97.79 to 98.21 is the primary upside target. Sellers are going to try to stop a rally on a test of this zone in an effort to form a secondary lower top. Buyers are going to try to take it out as they try to make 96.02 a new main bottom.
Forecast
Based on Friday’s close at 96.94, the support angles this week come in at 96.52 and 96.27. The latter is the last potential support angle before the 96.02 main bottom.
Overcoming the short-term angle at 97.02 will indicate the presence of buyers. If upside momentum develops then we could see a drive into the first downtrending angle at 97.35. This is followed by the next downtrending angle at 97.76.
The next resistance is a price cluster at 97.79 to 97.82. This is followed by the Fibonacci level at 98.21.
The swing chart and the Gann angles indicate the trend is decisively down. Given the current fundamentals, it is going to take a major change in investor sentiment to take out the multiple layers of resistance.
This article was originally posted on FX Empire
