Majors Decline, Pound Surges In European Trade Overall, the Asian session sent the dollar index to a new low for the current year, but the market turned around during the early European session, in-line with the selling seen in the commodity market. Interestingly, the only major pair that was not affected by the selling seen during the European trading hours was the pound, which appears to have developed a reverse correlation with the forex market direction. Dollar Index Technical View: TheLFB Member Charts 4 Hour Chart: Short. Main price points: 74.70 - 75.00. Looking for: Wave V) The dollar index is trading at new yearly lows, with a black wave c in progress, after the market broke through the black wave a low that appeared a few days back. The market is trading technically in the final stage of U.S. dollar weakness, with an ending diagonal looking to be completed very soon. An ending diagonal is a pattern that signals a potential turning point, which should happen as soon as the price reaches the 74.70-75.00 Fibonacci support region. In this area is the main 76.4% Fibonacci retracement level shown on our weekly chart. The market is currently searching for a bottom in sub-wave iii) of a black c leg, from where traders may look for a small corrective wave iv) before a final push of red wave v) appears. The euro (Eur/Usd 1.4900) gained approximately 40 pips during the early Asian session, but the pair topped in the 1.4960 area. After that it started declining, shedding every pip gained earlier and even added a few more to the red column. With this decline, the euro broke below a support trend-line that has been holding the pair for four days now; something that might show that the euro still needs to retrace some of the recent uptrend. The pound (Gbp/Usd 1.6210) had a very strong overnight session, in which it gained 230 pips literally out of nowhere, in the best intra-day performance of the last few months of trading. Most of the gains came during the European session, when the dollar was strengthening against every other major pair. Over the last three days of trading, the pound has gained 450 pips, recovering almost half of the ground loss over the last month of trading. The aussie (Aud/Usd 0.9195) surged 70 pips during the Asian session, to test TheLFB R2, after the Governor of the RBA Glenn Stevens said that Australia cannot be “timid” when raising the key interest rate. Even so, the aussie topped and at the European market open started retracing the ground gained earlier in the day. The cad (Usd/Cad 1.0250) had a range of 60 pips since the Thursday trading session started, flanked by TheLFB S1 (1.0210) and by the neutral pivot point (1.0265). Lately, the cad has been in a very strong downtrend, but in order for the cad to extend this downtrend, the commodity market will have to stay in the green. Trade Plan of the Day: TheLFB Trade Plan is Usd/Cad, 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 swissy (Usd/Chf 1.0140) traded again on a thin momentum, but still, this did not stop it from making a new low for the current year. Against the euro, the swissy has strengthened over the last few trading session, something that might force another intervention around the 1.5100 handle from the SNB if this trend continues. The yen (Usd/Jpy 90.10) gained 80 pips since the session started, after the yen broke above the resistance trend-line that held the market over the last three days of trading. On the daily chart, the yen is trading just above the 20-day moving average, and near the 90.00 area, an important swing point lately.

Source