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Currency Pair Overview:
Equity Sell-Off Empowers The Dollar Bulls
Overall, the sell-off from the equity markets had a major influence on the pound and on the aussie, but interestingly, it had only limited effects on the euro and swissy. Driven by risk-aversion, the yen broke below the 86.00 area, to reach the lowest value since 1995.
Thanksgiving Day has been historically very quiet in the financial markets over the last four years of trading, but today it proves to be a huge exception. Ahead, the market has some major uncertainties since the U.S. session is closed, but the volatility seen throughout the European session might attract some major players into the futures market.
Dollar Index Technical View: TheLFB Member Charts
4 Hour Chart Flows: Mixed Price Points: 74.90 Looking for: Wave iv)
Momentum: The index went into Neutral mode on 26th October and has struggled to find the strength to easily create and hold a Short trend. The sentiment is flowing from overbought to oversold in quick time and is following the global market open and close of Asian, European, and U.S. commercial markets. This is a tight trading range that is sitting at yearly lows, yet looks comfortable in breaking either way.
Elliott Wave: The dollar index moved lower on Wednesday after the break through the 74.70 key support level. The red wave iii), we mentioned yesterday, dropped to the 74.30 region as expected, where new lows were made.
Currently, traders may be looking for the 74.70 resistance level test in the Long red wave iv) pull-back, which may push prices into a lower red wave v) leg, ad also into the final leg of a black wave c.
The wave count with bearish expectations remains valid so long as the market trades below the critical 74.90, wave i) area.
The euro (EUR/USD 1.5080) spent the European session swinging around the neutral pivot point (1.5080), even though the other major pairs were sold at a strong pace. To the downside, the path is packed with important support areas, but a test in these regions might come if the selling in the equity and commodity markets continues.
Euro Technical View: TheLFB Member Charts
4 Hour Chart Flows: Long Price Points: 1.5000, and 1.5200 – 1.5250 Looking for: A move higher if 1.5000 support now holds
Momentum: The pair went into Neutral mode on 26th October and then struggled to find the momentum to create and hold a long trend until 19th Nov when it signaled a Long move that is holding. The sentiment is flowing from overbought to oversold in quick time and is following the global market open and close of Asian, European, and U.S. commercial markets.
Elliott Wave: The EUR/USD has finally broken through the 1.5000 resistance level, which was key for move towards the 1.5140 zone. Currently, the market is in a Short pull-back mode to test a support region before the market may continue higher again, to approach to our 1.5200-1.52500 mid-term target zone.
The significant support zone is shown at the 1.5060 area, where buyers may be back in the game. This area is the previous yearly top, established on 26th of October, and the initial support zone in the near-term.
A move back below the 1.5000 region will signal that bulls are temporary done.
The pound (GBP/USD 1.6560) developed an interesting pattern over the last two days of trading where just ahead of the European open, the Gbp experienced a major surge in momentum. Today, this momentum dragged the pound 200 pips lower, at a time that the market is normally moving side-ways. On the 4 hour chart, the pound appears to be trading in a symmetrical triangle formation.
The aussie (AUD/USD 0.9175) moved exclusively lower throughout the overnight session, and is forming a (temporarily) bottom in the 0.9150 area, near TheLFB Support 2 area. Overnight, the aussie was pulled lower by the sell-off in the commodity market and more specifically by the metals market.
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 1.0540), similar to the aussie, moved higher during the Asian and the European trading sessions affected by the weakness of the commodity market. However, the extent of the move was much led than of the aussie, due to the announcement by the Russian Central Bank that they are looking to add the Canadian Dollar as a reserve currency.
The swissy (USD/CHF 1.0000) is swinging around the parity level, in the 1.0000 area, with an overnight trading range of approximately 120 pips. Due to the strength posted in the last few sessions, the Swiss Franc touched a 19 months low against the U.S. dollar, and three month low against the single currency (euro).
The yen (USD/JPY 86.70) managed touch the lowest value since 1995 during the late Asian session, as the yen has been recently driven by the risk-aversion trade. However, analysts are saying that this level is unsustainable for the Japanese economy, which is heavily reliable on a weak currency.