Overall, the dollar strengthened across the board around the Sunday open, something that has not happened too often through the summer. The dollar index rose as much as 50 basis points, as the equity cash and futures markets were hammered lower. However, things returned to normal after the initial selling wave stopped during the second part of the Asian session and as the S&P futures hit the 1035 area. The major pairs spent the European session trying to recover some parts of the declines seen earlier in the day, but so far the gains are very small.
Dollar Index Technical View: TheLFB Member Charts:
4 Hour chart trend:: Long. Main price points: 75.83, and 77.10. Looking for: Wave II)
The index has reached the 77.10 zone over the past few sessions, as discussed on Friday. In this area a blue wave I) may already have hit the top, so a move lower into a corrective wave II) is expected. There is a clear five waves up from the 75.83 lows, which suggests that the bulls are here, in the near-term. Traders however, need to patiently wait on wave II) to complete before the market continues higher.
Meanwhile the 75.83 low must hold, or the wave count will be invalidated.
The euro (Eur/Usd 1.4630) tested briefly the 1.4720 area during the Asian session, the same place where the pair topped in Friday trade. From there on, the euro saw some strong sell orders hit the market, which made it plunge 150 pips to test the 20-day moving average and TheLFB S2 (1.4565). Throughout the European session, the Euro recovered less than half of the pips lost earlier in the day.
Trade Plan of the Day: TheLFB Trade Plan is Eur/Usd, one of the six that are available to members on the major pairs each day, plus four Jpy based cross pairs, plus S&P futures, oil, gold, and the dollar index.
The pound (Gbp/Usd 1.5885) was again the worst performer of the day, plunging as much as 200 pips during the first part of the overnight session. However, the London open made the pound look appealing once again, something that helped it advance 120 pips from the low made earlier in the day. With the declines seen during the Asian session, the pound lost 600 pips during the last three days of trading, and reached the lowest value in 4 months.
The aussie (Aud/Usd 0.8640) touched the 20-day moving average for the first time in three weeks, following the selling wave seen during the Sunday open. Moreover, the aussie broke below a two weeks old support trend-line during the overnight session, but the move was quickly retraced back.
The cad (Usd/Cad 1.0965) moved very little in the first session of trade this week, despite the volatility seen in the other major pairs. The cad failed to follow the rest of the market during the Asian session, gaining only 70-pips, but it also failed to follow the other majors going back the other way during the European session. For now, the cad is currently trading just below TheLFB R1 (1.0970), 70 pips above the Sunday’s opening price.
The swissy (Usd/Chf 1.0330) is currently consolidating above TheLFB R1 (1.0325), struggling to obtain the necessary momentum to break lower and recover some of the declines seen earlier in the day. Following the strong declines seen throughout the months of September, the swissy is trading at the lowest value in more than a year,
The yen (Usd/Jpy 89.40) is currently trading just below the Sunday’s opening price, but despite this, the yen had a very volatile overnight session. At the Sunday open, the yen plunged some 150 pips lower, to test a 3-month old support trend-line. However, the yen bounced back from this trend-line and recovered almost every pip it lost earlier in the day.
