US Dollar Index (DX) Futures Technical Analysis – December 12, 2016 Forecast

December U.S. Dollar Index futures are trading lower shortly before the regular session opening. The market attempted to breakout to the upside earlier in the session, but the move failed to attract fresh buyers. The volume is also thin with many of the major players on the sidelines ahead of Wednesday’s U.S. Federal Reserve interest rate decision.

The Fed announcement also carries risk. Although there is about a 98% chance the Fed will raise rates 25-basis points on Wednesday, there is still some uncertainty over the number of rate hikes it will project in 2017 and beyond.

Rising Treasury yields have helped boost the dollar since November 8. However, in order to continue the move, the Fed must acknowledge this in its monetary policy statement or the dollar could weaken.

Daily December U.S. Dollar Index

Technical Analysis

The main trend is down according to the daily swing chart. Momentum shifted to the upside, however, on December 8 with the formation of the closing price reversal bottom at 99.49.

The main trend will turn up on a trade through 101.88. This is followed closely by another main top at 102.12.

The short-term range is 102.12 to 99.49. Its 50% level or pivot at 100.805 is controlling the short-term direction of the market.


Based on the current price at 101.33 and the earlier price action, the direction of the dollar index today is likely to be determined by trader reaction to the downtrending angle at 101.37.

A sustained move under 101.37 will indicate the presence of sellers. The daily chart indicates there is room to break with the next targets coming in at 100.805, 100.62 and 100.49.

A sustained move over 101.37 will signal the presence of buyers. This could trigger a retracement of the earlier break with the next two targets coming in at 101.66 and 101.74. This area is followed by a pair of tops at 101.88 and 102.12.

Watch the price action and read the order flow at 101.37 today. Trader reaction to this angle will tell us if the sellers are retaining control or if the buying is increasing.

Be careful buying strength or selling weakness because of the light volume.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.