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Dollar Buying In The Near-Term May Hold

Global traded markets maintain their recent pattern of trade that has created heavy consolidation on the near-term charts, with little in the way of momentum or sentiment that looks able to easily break support or resistance on the Japanese Nikkei, German DAX, and S&P 500. The 20 and 50-day simple moving average areas are in play on the major global equity indices, as earnings season winds down and trading algorithms retreat from their high-alert status that had been looking for instant reactions to sound-bite news releases. There are no new near-term signals on equity indices trade at this point in time.

Bullion markets continue to hold support, with gold and silver continuing to trade close to yearly highs. Heavier consolidation in the gold bullion markets compared to silver has created a potential short near-term signal, with a break below 1420 targeting $11 of downward potential in gold trade. It has to be noted that the short near-term gold signal is against the mid-and long-term trends, and will only be for contrarian traders looking to bank early and often.

Oil markets are replicating the moves seen in bullion trade, with a sideways period of consolidation that has WTI crude oil trade holding support at 103.00, and as yet unable to break higher above recent tests of 107.50. It would seem that fair value has been found on global oil trade, and no new signals are looking to be easily formed in the near-term, outside of the potential drop to support at 102.50 that could confirm that the buy-the-dip mantra is still in play.

As noted in the previous client note, the dollar index found buyers after a test of support at 76.20, and reached up to hit 77.00 in trade on Tuesday. The global video charting reviews have covered the reasons why regional central banks will be looking to protect currency values against the ravages of a weak US dollar policy. The quadruple bottom that has formed over the course of the last four months on dollar index trade indicates that technically and fundamentally the path of least resistance may be to hold higher, and test 77.50 resistance.

The major currencies that trade against the dollar have seen a very mixed period of trade over the course of the last four months, with some moving higher, some moving lower, and some moving nowhere in relationship to percentage gains or losses against the greenback. Each major currency looks now to be setting price values on the potential for economic growth and expansion, which is a move away from the last four months of trade that have seen currency movements hedging the manipulation in the US dollar liquidity markets.

Main currency markets are at an inflection point, with the potential for some US dollar buying in the near-term to possibly dominate as each of the three regional global markets open and close each day. The main times to look for break-out movement will be 2 AM, 7 AM, and 11 AM East Coast time, in-line with Asian markets closing, European markets opening, London fixings on oil and bullion markets, and then the close of the European market which leads to daily book balancing.

The short-dollar trend is still in place on the mid-and long term reads, which leads traders to bank early and bank often when buying the greenback against the trend. Attention must be kept on economic calendar releases that will help stimulate break-out moves being able to hold on any given day. Alerts, signals, and updates will be emailed to clients as markets break near-term price action points.