Currency Pair Overview: Ever Decreasing Forex Circles

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Currency Pair Overview:

Ever Decreasing Forex Circles

The market was influenced by low trading volume on Monday, something that forced the major pairs to trade in two camps. The euro, swissy and the pound advanced during the Asian session, but declined throughout the European and U.S. hours. At the same time, the two commodity pairs – the aussie and the cad - together with the yen, moved flat most of the day. Ahead, investors prepare for the Australian interest rate decision, which is likely to leave an important mark in the currency market, whatever the result. Traders will be paying attention to the Reserve Bank of Australia’s decision overnight (22:30 EST).  Analysts expect a rate increase from the RBA, which is something that the previous Meeting Minutes do not clearly back. The expectations are to increase the rates from 3.50% to 3.75%.

Dollar Index Technical View: TheLFB Member Charts  
4 Hour Chart Flows: Mixed Price Points: 74.19 Looking for: Wave i) top confirmation at 75.60

Momentum: The index moved into Neutral mode on the 26th of October and since then has struggled to find the strength to easily create and hold a Short trend despites some negative price action days. 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.

Elliott Wave: The dollar index has recently found support around the 76.4% retracement zone at 74.60, where a corrective move of a Short wave ii may be completed. In this case, traders may look for a bullish bounce near to the previous black wave i (75.60) highs.

Any break of the 74.19 yearly lows, will invalidate the mid-term bullish expectations, and the wave count will have to be re-worked. 

The euro (EUR\/USD 1.5020) gained 120 pips during the first part of the day, but spent the European and U.S. sessions retracing the earlier-uptrend. The euro is trading near Sunday’s opening price, forming a neutral doji-star pattern on the daily chart. This comes after in Friday trade, the market formed a long bullish pin-bar candle.

Euro Technical View: TheLFB Member Charts
4 Hour Chart Flows: Mixed Price Points: 1.5143 Looking for: 76.4% Fibonacci resistance to hold at 1.5050

Momentum: The pair moved into Neutral mode on the 26th of October and then struggled to find the momentum in order to create and hold a long trend until the 19th of 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: EUR\/USD is in a very powerful recovery mode after the sell-of shown in the past week, driven by bad news from Dubai.

The wave count shown on the four hour chart below remains valid so long as the market trades below the 1.5143 top. Prices are testing the Long 76.4% retracement area at 1.5050, which is the last Fibonacci resistance level for a possible move hort.

Any break of the 1.5143 top will create a new wave count with new up-side targets, somewhere around the 1.5200 – 1.52500 zone.

The pound (GBP\/USD 1.6450) had a wide range on Monday, trading between the 20 and the 50-day moving averages. The pair has failed to break above or below either of the two price points, due to the market’s light momentum. On the 4-hour chart, the pound appears to be developing a descending triangle. A break above the 1.6600 area would confirm this pattern.

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 aussie (AUD\/USD 0.9160) had a range of only 80 pips during the day, trading in a similar way to the cad. This was most likely caused by the upcoming RBA interest rate decision, which had some investors shun away from the Australian dollar. On the daily chart, the aussie is trading between the 20 and the 50-day moving averages.

The cad (USD\/CAD 1.0555) spent the entire day struggling to break below TheLFB Support 1 (1.0550) area, but the move never came. On the daily chart, the cad is trading slightly below the resistance area formed by the 20 and by the 50-day moving averages, which have been important swing points lately.

The swissy (USD\/CHF 1.0040) saw a light trading day in Monday trade, just mirroring the euro’s moves most of the time. In the longer term, swissy’s trading direction lies to the downside, but in order for this to happen, the equity markets will have to stay into the green.

The yen (USD\/JPY 86.40) is currently trading near the lowest value that the market has touched in 14-years of trading, something that acts as a major threat for the export driven Japanese economy. As such, some say that the chances for a BoJ intervention rise with every day that the pair spends near such low levels.