USD Index Futures On A Tear, Yearly Highs In View

It has been a big Thursday for September USD index futures. The bulls have entered the market en masse, fostering more than a 60 tick gain. With a Triple-Top Pattern at yearly highs rapidly approaching, it appears that currency players liked what they heard from yesterday’s U.S. Federal Reserve policy announcements.

Action on the forex reflects this sentiment. Gains against the Euro, British pound, Australian dollar, and Swiss franc have highlighted the session. Hawkish FED dialogue regarding strong economic growth, inflation, and employment in the U.S. have favored the Greenback. It looks like the markets have begun pricing in a fourth 2018 rate hike as a likely possibility.

USD Index Futures Technical Outlook

The last three sessions have been big for September USD Index futures. Price has broken above topside resistance on the daily chart. For now, this market appears poised to test the yearly Triple-Top present in the 95.220-95.440 range.

For the near future, here are the levels to keep an eye on for this market:

• Resistance(1): Triple-Top Formation, 95.220-95.440
• Support(1): Daily SMA, 94.370
• Support(2): Bollinger MP, 94.345

Bottom Line: The presence of a Triple-Top Formation at yearly highs is a strong signal of topside resistance. Until elected, I will have sell orders queued up from the bottom of this range, 95.220. With an initial stop at 95.505, this trade yields more than 50 ticks when implementing a standard 1/1 risk vs reward management plan.

Wednesday’s FED Announcements have produced bullish action due to the statements issued. For the intermediate-term, the USD Index is likely to grind higher in anticipation of a hawkish FOMC Minutes release and upcoming September FED meeting.