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Currency Pair Overview:
Positive Equities, And The Dollar Holds On
Overall, after a positive Asian equity trading session, in which the dollar index was pushed to a new low, the currency market started retracing throughout the morning European trade. Interestingly, this is happening on a day that equity markets are trading deep in the green, something that does not happen very often. The recent pattern has been that equity markets trade higher, which pulls the dollar lower.
Over the last two weeks of trading the currency market saw a general lack of momentum and volume, which usually appears near the end of an uptrend, signaling that the market needs a short-term retracement of the dollar selling. The currency market is trading in an overbought condition against the dollar.
The euro is trading higher at the start of the week, away from the 1.4820 support area that was hit on Thursday. The market did not make a five waves down move recently, which means that a bearish reversal is not the case, (yet). We can see a red wave II/B corrective pull-back, which suggests that traders should remain bullish so long as the 1.4820 area holds, where wave II/B has bottomed.
A break of the 1.5062 zone will put the 1.5200 target area in play.
The pound (Gbp/Usd 1.6670) tested the 1.6740 area during the European session, but failed to break higher. In this area, the pair met a resistance trend-line that has held for almost a week. In order to expand its current uptrend, it is crucial for the pound to break above this price-point. To the downside, the 1.6600 area might act as an important swing point.
The aussie (Aud/Usd 0.9325) had a range of only 35-pips since the day started, even though the other major pairs saw stronger momentum. Over the recent periods of trade, the aussie has moved on weak momentum, something that might be interpreted as negative in the short to medium term.
The cad (Usd/Cad 1.0480) is currently trading below TheLFB Support 1 area (1.0465), after the pair lost approximately 50 pips on the day. On the daily chart, the cad is trading below the important moving averages, but the trading volumes have been in a steady decline lately.
The swissy (Usd/Chf 1.0090) continues to tease the 1.0050 area, but once again has failed to push lower during the overnight session. A break below this level will come only on positive equity markets and broad dollar weakness, something that has yet to happen.
The yen (Usd/Jpy 89.45) spent the overnight session consolidating in the 89.50 area, which is the lowest value it touched in a month. A break below this price point will probably lead the yen towards the 88.50 and then towards the 87.00 areas.
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.
Disclosure: No positions