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Futures Trade Desk- Dollar Index Back In The Range

Trade Desk Client Note

Global Futures Market Review

Currency Traders Get A Plan


Trend: Short Momentum: Average Sentiment: Average Average Daily Trading Range: Average $0.87 (1.1%)

Daily Simple Moving Average Lines: Blue (20 SMA) Green (50 SMA) Orange (100 SMA) Red (200 SMA)

DXY 4-Hour Chart

Technical Wave: Completed a five-wave ABC Up structure that targeted 79.30 after a break of 77.30. Now completing a three-wave ABC Down move, with the A-leg in place from 80.50 to 74.90, and the B-leg trying to complete from 74.70 to 77.90. Any downside C-leg moves will be further limited by the orange 100 and red 200-day SMA areas around 75.90. If support breaks at 75.90 the targets will be 74.90 and potentially 72.50, espeacially if global equity trade moves higher.

Buy Support: Bullish traders will be looking to buy the short reversals to the 75.90 swing point area from September, which could then target the 76.90 trend-line and 38% Fibonacci area of the 80.50 to 74.90 move lower.

Sell Resistance: Bearish traders will be looking to sell long tests of resistance that fail to break 78.50 (the 62% Fibonacci area of the move lower from 80.50 to 74.90) which could then target 77.20 and potentially 76.50

Overall: Traders continue to see a strengthening of the DXY/S&P 500 inverse correlation. When the S&P 500 and EUR move lower the dollar index quickly tests near-term resistance, while on the sessions of equity strength the dollar index tends to easily hold mid-term short tests of support areas. The dollar is being bought more easily on the days of equity weakness than it is being sold on days of equity strength. This inverse correlation will grow stronger as anticipation of further quantitative easing builds and fiscal debt levels are examined.

This Week: Look to buy-the-dip if equity indices weakness is seen, as attention turns away from EU debt and the availability of USD-based lines of credit. Accept that news-headline related moves are dominating technical potential.