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Currency Pair Overview:
Euro Plunges, Dollar Index Bounces
Overall, the dollar index managed to bounce from just under the 76.00 area, the lowest value touched over the last 15-months of trade, as equity and oil trade found sellers. The dollar index managed to strengthen across the board during the day, posting important gains especially against the euro and the aussie, which plunged at a very strong pace throughout the European and U.S. sessions. As long as the equity markets remain in the red, the dollar index is set to continue the current uptrend.
Dollar Index Technical View: TheLFB Member Charts
Daily chart trend: Short. Main price points: 74.00, and 75.00. Looking for: Wave C)
Prices on the dollar index have reversed over the past week around the black resistance line, influenced by a higher stock market. Currently the market is threatening the yearly lows, where a break-out will push prices lower. This is shown in the blue wave V), of an extended red wave V leg, of larger C), which may find the lows somewhere around the 74.00 area.
The euro (EUR/USD 1.4840) is currently trading below TheLFB S3 (1.4850), after it tumbled 150 pips during the day. With this decline, the euro is trading once again below the 20-day moving average, which has been an important swing point lately. To the downside, the next important support area is in the 1.4750 area, next to the 50-day moving average.
The pound (GBP/USD 1.6580) had a daily range of only 90-pips in Thursday trade, far below the average of the last few weeks of trading. This happened as the pound traded just above the 20-day moving average, and at the same time above a support trend-line, which has been holding the market for almost a month. The lack of short-sided momentum may be an indication that a long pound play could more easily happen than on most pairs, but we are very much aware of the volatility in the pair when it is playing catch-up on previous moves.
The aussie (AUD/USD 0.9220) tumbled 150 pips during the European and the U.S. sessions, after it reached a new yearly high in the first part of the day. The aussie’s sell-off came on a weak commodity market, which has been the main driver of the Australian dollar over the last few weeks of trading.
The cad (USD/CAD 1.0565) advanced more than 100 pips, but reached a strong resistance area formed at TheLFB R3 (1.0560), and by the 20-day moving average. A break above this price point has the potential to send the cad higher, probably up to the 1.0700 resistance area.
The swissy (USD/CHF 1.0180) bounced from the 1.0050 area in Thursday trade, where the pair formed a swing point low during the last few days of October. Against the euro, the swissy moved in a 20-pip range most of the day, unable to break anywhere decisively.
The yen (USD/JPY 90.35) saw a 30-pip range during the first part of the day, but the U.S. open helped the pair move some 70 pips higher, to break above a trend-line that has been holding things up since late October. On the daily chart, the yen is trading just above the resistance trend-line formed by the 20 and the 50-day moving averages.
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.