U.S. Dollar Index (DX) Futures Technical Analysis – Momentum Shifted to Down with Reversal Top Confirmation

The U.S. Dollar is inching lower against a basket of major currencies early Monday after posting a potentially bearish closing price reversal top the previous session.

The safe-haven U.S. Dollar slipped from a 9-1/2 month high on Friday, as risk appetite improved with equities gaining and benchmark Treasury yields higher, although the near-term outlook for the greenback remained upbeat.

At 01:37 GMT, September U.S. Dollar Index futures are trading 93.425, down 0.083 or -0.09%.

The greenback remained supported overall by concerns that the coronavirus Delta variant could derail the global economic recovery just as central banks begin to reverse COVID-19 pandemic-related stimulus.

Last week, the dollar was supported by the minutes of the Fed’s July meeting, released on Wednesday that showed officials largely expect to reduce their monthly bond buying later this year.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside early Monday with the confirmation of Friday’s closing price reversal top. This doesn’t change the main trend, but it could trigger a 2-3 day counter-trend sell-off.

A trade through 93.750 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through 92.470.

The minor range is 92.470 to 93.750. Its 50% level at 93.110 is the primary downside target. Since the main trend is up, buyers could come in on the first test of this level.

Daily Swing Chart Technical Forecast

The direction of the September U.S. Dollar Index on Monday is likely to be determined by trader reaction to 93.455 and 93.510.

Bearish Scenario

A sustained move under 93.455 will indicate the presence of sellers. If this move creates enough downside momentum then look for a move into the minor pivot at 93.110. Look for a technical bounce on the first test of this level. Taking it out could trigger the start of a steep break with 92.495 – 92.470 the next major target.

Story continuesBullish Scenario

A sustained move over 93.510 will signal the presence of buyers. This could trigger a rally into 93.440. Overtaking this level will indicate the buying is getting stronger with 93.750 the next likely upside target.

Side Notes

Watch for choppy, two-sided price action as traders prepare for Jackson Hole and a possible clarification of the Fed’s tapering plan.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire