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A Week Of Consolidation Sets Up A Year-End Break

TheLFB Swing Points (the neutral price point from the previous session) on all of the major currency pairs are revealing that a sideways crawl is in place, instigated by a miss on last week's Non-farm Payroll numbers, and then added to by major disturbance hitting the U.S. and German government bond markets this week.

The fundamental revelations have stemmed speculative interest in being in a market that looks to be in consolidation mode while preparing for a major break-out. All of which, when added to daily chart Simple Moving Average price points that are in play, will create a sticky period of trade that may favor banking early and often, in-line with regional market open and closes, ahead of a year-end move that may surprise those sitting on the sidelines.

Eur/Usd has 1.3240 as the main swing point with the 100 SMA at 1.3350, with 1.3200 acting as intra-day support. Weak equity trade will allow the Asian session moves lower to hold as 4-hour chart reads still favor short euro.

Gbp/Usd has the 100 SMA at 1.5750 and the main swing point at 1.5770, with 1.5700 as intra-day support. The market now absorbs the BoE interest rate decision on cable as 4-hour reads challenge the short trend that is still in place.

Usd/Jpy now trades at the 100 SMA at 83.80. The parabolic move higher in recent trade may have no choice but to retrace and consolidate if Treasury market trade holds support after a previous session of imploding note values, in-line with weak 4-hour chart reads on the pair.

Usd/Cad has the swing point at 1.0100, and 20 SMA resistance at 1.0150 that will be hard to break if crude oil trade holds 87.50 support. The 4-hour chart reads are a real mess on the pair, with choppy and overlapping price action.

Dollar Index (80.30) swing point trade is at 80.10 support, with the 100 SMA at 80.20 and resistance just above at 80.60 that will restrict movement to the long side. Equity trade moving lower to test support has allowed the long side of the dollar to be bought, as a safety play that also hedges the volatility building in the Treasury and interest rate markets.

The 20 SMA will offer support at 79.70 if equity futures trade moves higher, although the 4-hour chart reads are still showing bullish trends and low momentum that favor Usd buying in the mid-term. Upside tests of 80.60 on weak equity trade look to be about all that could be asked of the dollar index in the near-term.

S&P 500 Futures (1232) swing point resistance is at 1238, and holding the price point channel from Dec 02 10, with 1225 and 1221 swing point support just below. Futures trade activity dominates what then follows through in the cash market, with low-participation long moves able to hold at yearly highs.

The last decade of trade has seen no appreciation in S&P 500 value, and factoring in inflation shows a decent loss which is something that investors will be weighing as year-end rolls around. Global equity trade has moved higher with the main players seeming to be high frequency algorithms and central bankers instigating most price action that continues to hold a long 4-hour chart trend.

Crude Oil (88.20) swing point resistance is sitting at 89.90 as a road-block of resistance. The heavy reversal in the previous sessions that wiped out a test of 91.00 with a 3.5% reversal in one afternoon session has left speculative interest eyeing the 87.50 and 86.60 swing point support areas. The December price channels are holding steady, with a move lower to test support likely to happen if global equity trade finds sellers.

Recent moves higher seem to have been more of a hedge against Usd volatility rather than generic global supply and demand, and when speculators start to dominate intra-day trade the moves can get violent.  The 4-hour chart reads are bullish on crude, with near-term reads holding support.

Gold Bullion (1385) swing point resistance is sitting at 1400, with 1380 the swing point  holding just above the 1375 20 SMA and 1360 50 SMA price point areas. Bullion is back inside the Nov/Dec price channel that looks to have solid support in place that could easily allow for further tests of all-time highs at 1436, so long as Treasury markets hold support.

Hard commodities are holding onto huge gains on the year in the ultimate play against Usd manipulation and printing, and look as though buy-the-dip strategies will easily hold the long 4-hour trend going into the year-end.
 



Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: TheLFB runs an automated trading program that is constantly one side of the dollar or the other, in-line with the detail posted in the article.