Usd Held At Resistance On Triple Witching Friday

The major currencies were helped by S&P futures and by the cash equity market in gaining a few pips during the overnight session. However, compared to the sell-off seen over the last two weeks of trading, this intra-day uptrend is very small. Unless the cash and equity markets continue to stay into the green during the day, another round of Usd buyers might join the market during the upcoming U.S. session.

The one thing that may hold fair value on most markets is the expiry of December, quarterly, and yearly U.S. option contracts today.

Dollar Index Technical View: TheLFB Member Charts

4 Hour Chart Flows: Long Price Points: 78.00 Looking for: A Short wave IV) pull-back, towards 76.50

Momentum: The dollar index went into Long mode on in early December and has held that trend since. The near-term path of least resistance is consolidation around new highs, with long-bounces on weak equity trading days. The weekly close above 76.00 was a signal that buyers are dominating, is bullish and signals a momentum reversal.

Elliott Wave: The dollar index has made a turning point around the 78.00 resistance area, where a Long, blue wave III) may finally have found the highs. A three wave move of a pull-back into a lower wave IV) should follow, because after every five waves move finishes, Elliott wave traders will look for a correction, labeled as a black a-b-c in our case.

As long the 78.00 high stay in place, prices could fall into the 76.50 zone.

The euro (Eur/Usd 1.4390) had an effective range of approximately 30 pips during the overnight session, swinging around the 1.4390 area, near the neutral pivot point. Similar to the entire market, most of the gains seen overnight came during the Asian session, while the pair traded flat in European trade. On the daily chart, the euro is trading between the 23.6% and the 38.2% retracements of the uptrend that started in March 09.

The pound (Gbp/Usd 1.6205) is currently testing the 1.6200 area, which has been an important support during the last week of trading. A break higher would shift the pound’s short-term outlook to mixed, from the current sell, but this move will have to come on strong momentum. On the higher time-frames, the pound is trading in a descending triangle.

The aussie (Aud/Usd 0.8880) saw strong trading activity around Friday’s open, plunging 60 pips and then recovering every pip lost in a short period. On the daily chart, the aussie is consolidating above the 100-day moving average, the same place where the market based in Thursday trade.

The cad (Usd/Cad 1.0665) showed bearish momentum even from the Asian session, but until now, the pair has failed to break below the 1.0660 area. A move lower might allow the cad to test the 1.0550 area, which has been an important intra-day swing point over the last few weeks. At 08:30 EST, the market is expecting the Canadian Wholesale Sales, but usually this report has little influence in the market.

The swissy (Usd/Chf 1.0420) is again trading in the 1.0400 area, shedding every pip that the pair gained in Thursday trade. Against the euro (Eur/Chf) the swissy posted strong losses over the last two days of trading, dropping as much as 180 pips, to reach the lowest value since March. However, the market retraced a part of today’s sell-off against the euro.

The yen (Usd/Jpy 90.20) was the most active pair during the overnight session. Throughout Asian trade the yen plunged 100 pips following the BoJ’s interest rate meeting that held rates. However, from there, the yen started retracing and right now, it is trading 30 pips above Friday’s opening price. On the medium to long term, the yen’s outlook is long.

One-Day-Up Equity Pattern In Play

Equity Futures: Dow +29.00. S&P +4.50. NASDAQ +4.50. Japanese Nikkei +33.00. German Dax +5.00.

European Trade: The last two weeks of trading had been characterized by indecision in the global market, with the equity markets moving one day up, the next two down. The pattern was continued in Friday trade, helped by gains posted by S&P futures and the European equity markets.

The regional indexes in Europe opened higher in the last trading session of the week. Overall, shares advanced approximately 0.50%, helped by the commodity market which bounced on weaker dollar trade. The gains were not spread evenly through the market, as had happened lately. Germany’s DAX added 0.60%, but Italy’s MIB and Holland’s AEX indexes were trading barely above the breakeven line. In the emerging European region markets trade was also split, with Hungary’s BSE gains of 1% being the top mover in Europe, as shares declined in Poland and Czech Republic.

Throughout the overnight session, the S&P futures bounced from the 1090.00 area, near a trendline that has been holding the market since mid July. The outlook is mixed, with equities being susceptible to strong moves on both sides of the trend-line. However, a break lower would be seen as a very negative sign, sending the global markets into risk-aversion.

The next six week period is historically very bullish for equity trade (Shwartz Stock Market Handbook).

S&P Technical View: TheLFB Member Charts

Overall View: Looking for a top of an ending diagonal (reversal) pattern

4 Hour Chart Flows: Mixed Price Points: 1084, and 1118 Looking for: An ending diagonal (reversal pattern)

Momentum: The S&P futures market confirmed a Long momentum read on Nov 11th and has built a near-term support base around 1085. This week the trend flattened out. The 1105 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.

Elliott Wave: S&P futures were unable to break through the 1118 top this week, which was a bullish sign for the U.S. dollar. If the S&P breaks through and holds under the lower support line of an ending diagonal at 1095, the dollar could make further gains against the major pairs if the Usd/S&P correlation holds as it has done recently. For this scenario to follow through, the wave 5) highs shown at 1118 must remain unbroken.

If there is be any break through the 1118 top, we will look for a move into the 1130-1140 area (alternative, boxed wave count), and to a Long reversal of the current down-trend on the majors to follow.

Sector Moves: The heavyweight bank and insurance companies were the only decliners in European trade. The gains posted by the basic resources, oil & resources, chemicals, healthcare and technology sectors helped the market trade the green and to post modest gains. European technology and healthcare companies advanced 1%.

Within the technology sector, the gains were led by the German companies SAP and Infineon Technologies. Infineon Technologies added almost 5%, the most in the German DAX, after JP Morgan updated its price’s target, while Commerzbank recommended buying the company. Remaining in the German index, the utility companies E.ON and RWE rose after Credit Suisse said that the two might see a year-end rally. E.ON is trading up 1.90%, following closely SAP and Infineon.

Upcoming Economic Moves: Clear of red-flag reports

Crude oil was recently trading at $73.40 per barrel, higher by $0.75

Gold was recently trading up by $0.90 to $1108.30.

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

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