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Currency Pair Overview:

Negative Equities Help The Dollar Index

Overall, the dollar index took advantage of the negative equity markets initially took around the world in Thursday morning trade, and managed to advance a few points ahead of the U.S. open. Most of the dollar’s gains came during the European session, after relatively flat Asian currency trade. The macroeconomic calendar was light on Thursday, with the European calendar being clear of any red-flag reports, while the upcoming U.S. sessions holds the U.S. unemployment claims, and Oil Inventory report.

Dollar Index Technical View: TheLFB Member Charts
4 Hour Chart: Short. Main price points: 74.95, 75.60, and 76.82. Looking for: Wave iv pull-back

The dollar index made a small turning point recently after a few tests of the 75.00 area over the past few days.  For now, we are still looking for a move lower into the 74.00 support zone, where red blue wave V), sub-wave of a larger wave V may hit the bottom.

Currently, the dollar index is showing signs of a long corrective bounce higher in black wave iv from where traders may look for final wave v.

The 75.60 support zone must hold, otherwise the wave count will have to be re-worked.

The euro (Eur/Usd 1.4950) plunged 80 pips during the European session, and is now trading just above TheLFB R1 (1.4940). A break below this price point will send the pair straight into the 20-day moving average, which is patiently waiting in the 1.4885 area. During the European session, a report showed that European Industrial Production advanced 0.3%, less than expected.

TheLFB Trade Plan of the Day is one of the six that are available to members on the major pairs each day, plus four Jpy based cross pairs, as well as S&P futures, oil, gold, and the dollar index. 

The pound (Gbp/Usd 1.6550) had a daily range of 90 pips during the overnight session, but still, the pair failed to pull any important moves. Earlier in the session, the pound tested the 1.6530 area, where it bounced off a trend-line that has held the market since Oct 13 09. A break below this trend-line, coupled with the negative momentum seen lately has the potential to send the pound much lower.

The aussie (Aud/Usd 0.9305) received a strong boost during the Asian session, when reports on the Australian labor market hit the newswires with a better than expected read. This provides the market further clues that the RBA is likely to continue hiking rates, as the Australian economy looks in very good shape when compared to the major pair economies.

The cad (Usd/Cad 1.0475) is currently trading in the 1.0475 area, which had been an important intra-day swing point lately. The cad’s declines come after three days in which the pair had been moving almost exclusively lower, losing approximately 300 pips.

The swissy (Usd/Chf 1.0105) mirrored the moves made by the euro during the overnight session, something that happens most of the time. Since the day started, the swissy gained 50 pips, and is currently preparing to break above the range of the last few trading sessions. Over the last two days of trading, the swissy formed two consecutive (indecisive) doji-stars.

The yen (Usd/Jpy 89.75) saw a range of only 30 pips since the session started, as the pair moved without any real trading volume or momentum. Lately, the Japanese bond market has been affected by deflation and credit risk threats, but this had little influence on the value of the Japanese yen.

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Market Wire Update:

Coin Flick And Sideway Markets

Forex Trader Note: Australian employment data came through on the bullish side of things, and sent Aud/Usd up to test the R2 swing point levels on the pair. The 0.9375 area will need to see a 4 hour chart close above it before long trades can now be easily considered. The long moves in aussie sent the dollar lower against the major pairs, as per the normal reaction to Australian releases in the thin Asian pre-market, with the question being, can this start a move that holds?

The chances are slim, because the pattern this week has been of a sideways grind, and unless equity markets can break long and hold, the lack of momentum may stay this way. These are ugly looking charts right now, with very little momentum or direction. Take a look below; mixed trends and momentum. This is a coin flick at the moment.

Lots and targets: Anything taken ahead of the closed 4 Hour candle price points shown below will require reduced lots and reduced targets.

Red Flag Economics: 
05:00 EST Eur Ind. Production Exp 0.6%, Prev 0.9%
08:30 EST Usd Unemplymnt Exp 512K, Prev 512K
11:00 EST Usd Crude Oil Inventories Prev -4.0M

Dollar Index: The 75.80 area now becomes the pivotal price point for the dollar index. A four hour close above/below there signals which way the market is willing to test the value of the Usd. Swing Point: 75.90

S&P Futures: The 1082 and then 1100 areas on the S&P are the near-term price action points, that may form a price channel if global markets fail to find equity buyers. The 1055 support area looks solid. Swing Point: 1080

Crude Oil: 80.20 and 81.05 are the topside numbers on crude oil trade, with 81.75 above that. There is a lot of noise at the 78.50 area, with 77.50 and 76.50 under there. Swing Point: 78.90

Gold Bullion: 1075 on gold trade will be near-term support, backing any long tests of 1120. The short side is also backed by 1065. As the market trades long gold as a hedge, it seems that the gold bugs will dominate. Swing Point: 1105

Disclosure: No positions

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Currency Pair Overview:

Dollar Hits Fresh 15-Months Low

Overall, the dollar index fell to a new 15-months low on Wednesday, but the currency market bounced higher from this level as the equity and the commodity markets posted small gains in Wednesday trade. This is something that shows that the correlation between these three assets reduced in intra-day trade. The U.S. calendar was empty of any significant reports, allowing the currency market to find a temporarily fair value for the major pairs.

Dollar Index Technical View: TheLFB Member Charts  
Daily chart trend: Short. Main price points: 74.00, and 75.00. Looking for: Wave C)

Prices on the dollar index have reversed over the past week around the black resistance line, influenced by a higher stock market. Currently the market is threatening the yearly lows, where a break-out will push prices lower. This is shown in the blue wave V), of an extended red wave V leg, of larger C), which may find the lows somewhere around the 74.00 area.

The euro (Eur/Usd 1.4970) tested the 1.5050 area throughout the morning session, but the move was completely retraced. Since the day started the euro had a range of only 90 pips, with Wednesday being the third day consecutive day in which the pair traded at a considerable distance from the average ATR of the last few weeks of trading.

The pound (Gbp/Usd 1.6550) is currently trading 550 pips below the Wednesday’s opening price, being the worst gainer of the day. The pound’s sell-off begun in the middle of the European session, when the Governor of the BoE Mervyn King said that a weak pound can help the U.K. economy. With this sell-off, the pound is again trading below the 1.6600 area, which has been the main swing point area over the last six months of trading.

The aussie (Aud/Usd 0.9285) took advantage of the last two days of trading to consolidate in the 0.9300 area, near the high of the current year. >From this area, the aussie can easily push higher, but for this to happen, S&P futures will need to be significantly in the green. During the upcoming Asian session, important Australian labor data will hit the newswires.

The cad (Usd/Cad 1.0460) had been trading in a steep downward channel over the last three days of trading. However, the cad is now consolidating near the 1.0450 area, where the resistance trend-line of the near-term channel can be found. A break above this level will probably send the cad higher over the upcoming sessions.

The swissy (Usd/Chf 1.0085) is forming a neutral doji-star candle on the daily chart, after it formed a similar pattern during the prior day of trading. Usually, doji-star formations denote the market’s indecision, which is currently high, considering that the swissy is trying to break below the support area that has been holding the market for almost 18 months.

The yen (Usd/Jpy 89.80) moved only during the early Asian sessions, while it spent the rest of the day trading in the 89.80-90.00 area. Over the last period, the yen struggled to break below the 88.80 area, but until now, it has failed to pull the move off. A bounce from this support will probably send the yen much higher. On the daily chart, the yen is trading below all the important moving averages, and near one-month low.

Disclosure: No positions