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Currency Pair Overview: Weak Price Action, Post-FOMC Meeting

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Currency Pair Overview
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Weak Price Action, Post-FOMC Meeting

The market failed to pull any important breakouts in Wednesday trade, despite the report calendar being loaded with important reports. During the U.S. session, most of the trading was concentrated around the FOMC decision, which empowered the dollar bulls as the Fed acknowledged that the economy is recovering, which, in time, should puts upside pressure on the U.S. interest rates. However, despite some long spikes, the market has failed to move anywhere importantly during the FOMC decisions, with the major pairs turning around at the first intra-day swing point that they met.

TheLFB Charting LinkDollar Index Technical View: TheLFB Member Charts
Daily chart trend: Mixed. Main price points: 74.19, and 76.82. Looking for: A Long wave I/ A

Prices on the dollar index have reached new lows over the past few weeks around the 74.00 zone where the trend has quickly reversed. Traders can look for a move higher in the mid-term away from an ending diagonal pattern shown in wave V) position as the prices have broken through the upper resistance line, which is now signaling that a bull market is in process.

If the wave count is correct and if the dollar bears are done then the market should break through the 76.82 resistance area, which will confirm a current turning point.  In this case, a Long three wave move towards the 79.00 area is expected.

The euro (Eur/Usd 1.4535) spent the day trading between two price points, but until now, it has failed to break either one of them. To the downside, the 1.4500 area acted as support for a second consecutive day, while to the upside, the euro bounce from the 1.4580 resistance level. Around this price point, the euro met the resistance of the downward channel in which the pair traded since early December.

The pound (Gbp/Usd 1.6330) is also trading in a downward channel, developed since November 16 09. Unlike the euro, the pound managed to briefly break above this price point in early December, but it has failed to sustain the uptrend. Right now, the pound is trading near the resistance of the downward channel, in the 1.6400 area. A break higher will allow the pound to retrace some of the recent declines.

TheLFB Charting LinkPound Technical View: TheLFB Member Charts  
4 Hour Chart Flows: Short. Price Points: 1.6168, and 1.6720. Looking for: A Long wave ii pull-back towards 1.6400

Momentum: The pound's trend went Short on 3rd December, and has meandered lower since then. (The pair can be just as easily bought as sold).

Elliott Wave: Cable is in a short near-term mode, and moving within a huge black wave III). This is showing as an impulsive bearish structure in our Short blue sub-wave i, that has reached the 1.6170-1.6200 support area over the past week.

We can count five completed waves down in a Short blue wave i, which signals for a near-term, Long pull-back in wave ii. Wave ii is a corrective wave, (three waves, a)-b)-c) with wave b) in progress), and it may reach the 1.6400-1.6500 zone over the next few days before a down-trend into a Short black wave III) can continue.

If the weekly base at 1.6168 is taken out before a Long pull-back in wave ii appears, traders may see a move towards the 1.6000-1.6050 area.

Aussie (Aud/Usd 0.9005) had a range of approximately 60 pips during the European and U.S. sessions, which held it from moving anywhere importantly. Throughout the day, the aussie appeared to be the weakest of the major pairs, due to the lower than expected, yet still expansionary, GDP numbers reported in the Asian session. Since the beginning of the year, the Australian dollar has strengthened, and been helped by the bullish Australian business cycle. However, the Q3 growth rate of 0.2%, which helped shed some of the aussie’s strength, raises some questions about the pair’s value.

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 cad (Usd/Cad 1.0600) continues to trade trapped within the 90-pip range developed over the last three days of trading. In order to move anywhere, the cad would have first to find the necessary momentum to break above the 1.0640 area or below the 1.0550 level. Such a move can come only on broad dollar strength/weakness.

The swissy (Usd/Chf 1.0380)’s chart is a perfect reflection of the euro, (inverted). The two currencies have held a very strong correlation lately, something that made the Eur/Chf exchange rate come to a practical standstill. To some extend, this looks like the SNB is trying to peg the value of the Swiss franc.

The yen  (Usd/Jpy 89.80) had two attempts to break above the 89.80 area, but until now, both have failed. Since April, the yen had been trading in a downward channel, but now is showing some signs that it might have the strength to break higher. If this happens, the yen could shift its outlook to long, from the current neutral.

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Disclosure: No positions