US Dollar Index (DX) Futures Technical Analysis – Trying to Form Bullish Secondary Higher Bottom

James Hyerczyk

Updated Thu, Jul 6, 2017, 10:58 PM

September U.S. Dollar Index futures are trading slightly better and inside yesterday’s range as investor await the release of the U.S. Non-Farm Payrolls report at 1230 GMT. This usually indicates investor indecision and impending volatility.

The index plunged on Thursday as investors reacted to a strong rally by the Euro. The single-currency rose sharply after the 10-year German Bund yield cracked the 0.50 percent level for the first time since January 2016.

The headline number of the NFP report is expected to show the economy added 175K new jobs in June. Some traders are looking for an even lower figure given Thursday’s disappointing ADP report. The unemployment rate is expected to remain at 4.3% and Average Hourly Earnings are expected to show a slightly increase from 0.2% to 0.3%.

Late in the session, the U.S. Federal Reserve will release its semi-annual monetary policy report to Congress at 1900 GMT. This will precede next week’s testimony by Chairwoman Janet Yellen.

Technical Analysis

The main trend is down according to the daily swing chart. A trade through 96.255 will change the minor trend to up. A move through 95.225 will signal a resumption of the downtrend.

The short-term range is 95.225 to 96.255. Its retracement zone is 95.74 to 95.62. This zone is currently being tested. This zone is very important because aggressive counter-trend buyers are going to try to form a potentially bullish secondary higher bottom. Bearish trend traders are going to try to drive the market through this zone in an effort to make 96.255 a new main top.

The main trend is 97.515 to 95.225. If there is a rally then its retracement zone at 96.37 to 96.64 will become the primary upside target.

Forecast

The current price at 95.69 places the index inside the short-term retracement zone at 95.74 to 95.62.

A sustained move over 95.74 will indicate the presence of buyers. This could trigger a fast rally into a pair of Gann angles at 95.85 and 95.89. Overcoming 95.89 will put the index in a strong position with potential targets coming in at 96.225 and 96.37.

A sustained move under 95.62 will signal the presence of sellers. The first target angle comes in at 95.54. Taking out this angle should extend the break into the next uptrending angle at 95.38. This is the last major support angle before the 95.225 main bottom.

Look for a bullish tone to develop on a sustained move over 95.74 and a bearish tone to develop on a sustained move under 95.54.

This article was originally posted on FX Empire