Overall, the Asian session was very volatile in Thursday trade, but the market lost all its steam during the European session, as traders prepare for the interest rate decisions coming from the major European central banks, the BoE and the ECB. The only pair that actually managed to move during the European session was the pound, the same pair that barely moved over the last four days of trading. Ahead, the market is likely to become very volatile during the early U.S. session open.
Dollar Index Technical View: TheLFB Member Charts
4 Hour Chart: Short. Main price points: 75.83, and 75.00. Looking for: Wave V)
The index is trading just a few points away from important 75.83 lows, which means that dollar bulls are still not coming in to bid things higher as yet. As such, the market may be forming an ending diagonal pattern with wave V) in progress. Each leg of the diagonal is sub-divided by a three waves, so the market should also make a three wave move in the current wave V) that could reach new lows over the coming days. The target of this wave V) is shown around the 75.00 support region.
The euro (Eur/Usd 1.4775) had a very steep uptrend during the early Asian session, gaining almost 90 pips. However, since then the pair developed a side-ways range, and right now, the euro is trading just below TheLFB R2 (1.4780). On the daily chart, the single-currency is trading very close to the high of the current year, set in late August in the 1.4850 area. Ahead, investors prepare for the ECB press conference, which usually creates strong volatility in the forex market.
The pound (Gbp/Usd 1.6050) has headed only higher since the late U.S. session, gaining approximately 180 pips. This comes after a period of four days, in which the pound was unable to move anywhere decisively and formed only candles with a small body and long wicks on the higher time-frames. At 07:00 EDT, the market will witness the BoE interest rate decision.
The aussie (Aud/Usd 0.9045) touched TheLFB S3 (0.9030) at the start of the Asian session, something that happens very rarely. Moreover, the aussie managed to break above this price point during the European session, and even gained some additional pips. Lately, the aussie had been in a very strong uptrend, but right now, the pair is trading in overbought territory both on the daily and weekly charts.
Trade Plan of the Day: TheLFB Trade Plan is Aud/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 cad (Usd/Cad 1.0550) fell down to TheLFB S1 (1.0540), but since then, the pair struggled to find the necessary momentum to extend the current downtrend. In addition, around the same area, the pair had bottomed over the last two days trading, something that puts even greater pressure on the pair’s ability to move lower.
The swissy (Usd/Chf 1.0260) bounced from the 20-day moving average near the opening bell and since then has declined about 80 pips, shedding every pip gained during the prior day of trading. The Elliott Wave analysis shows that the pair had recently finalized wave 5 of a downtrend started in April 2009.
The yen (Usd/Jpy 88.20) had a range of only 25 pips during the European session, just above the 0.8800 area, the same place where the market bottomed during the last few trading sessions. Lately, the yen extended its downtrend, even if members of the Japanese government had expressed their concerns about the strength of the Japanese yen. Tenured market participants will be thinking that an intervention might come soon.
