FOREX TRADING

Long Equity Momentum – Mixed Global Markets

Forex Trader Note: Global momentum reads are indicating long equity direction, mixed oil and gold trade, and very mixed currency reads. That intimates that Usd weakness may hit, on the strength of risk tolerance in the global market. Over the last few days of trading the dollar index has been in a clear uptrend, helped by positive macroeconomic data coming from the U.S. economy.

This has forced the market to revalue the strength of the dollar index, and is something that will continue until fair value is found off the economic calendar this week. Look for the mixed momentum in these pairs to continue.

Macro View:
The week has started with global equity strength in reaction to Dubai World receiving a $10B bailout from the Abu Dhabi government, that allows the company to restructure its debt obligations. The Greek stock market advanced 2.10% on the Government’s plan to reduce the fiscal deficit. Last week, Greece’s bonds were downgraded following the Government’s inability to pursue a responsible fiscal policy. The news has allowed S&P futures to touch 1118, and now look to 1105 as main support.

Red Flag Economics:
18:50 EST Jpy Tankan Manufacturing Exp -26 Prev -33
05:00 EST Eur Industrial Prod Exp -0.6%, Prev 0.3%

Dollar Index: The dollar index went into Neutral mode on 26th Oct and has held that trend since. The near-term path of least resistance is consolidation around new lows, with long-bounces on weak equity trading days. The weekly close above 76.00 (a signal that buyers are dominating), is bullish and signals a potential momentum reversal. Swing Point: 76.35

S&P Futures: The S&P futures market confirmed a Long momentum read on Nov 11th and has built a near-term support base around 1095. The 1115 area will be a major resistance point to battle this week. The moves to test and hold support are impressive, and now backed with Japanese and German markets that are also looking bullish. Swing Point: 1105

Crude Oil: There is still a very flat momentum read to crude oil trade that has been in place since 6th Nov. The 72.50 area continues to be a main price point, after sellers were held at bay recently around 69.50. The 80.50 area is the topside number to breach. There is a lack of speculative interest in oil trade right now. Swing Point: 70.10

Gold Bullion: Gold signaled long on 3rd Nov and has just started to reverse that mode with recent profit taking. 1110 is near-term support, backing any further long tests of 1150. Now looking for signals that support is in to buy a Jan Call option, or if 1100 fails to hold, and to then buy a Jan Put option. Swing Point: 1122

Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com

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