The saga continues as
we see the fiscal cliff “winners” and “losers” played out from sound bite to
press conference to progress to letdown. Thursday night was the latter and the
letdown of the rejection of so-called “Plan B” by House Republican leaders caused
the market to re-think just how much optimism that had already been baked into
the cake. Unwinding the “optimism position” was swift Thursday evening but it
seems that as traders re-evaluate the situation on Friday - going into the
weekend – optimism that the cliff will be averted is returning as equities pare
their gains.
Technically
the daily U.S. Dollar Index remains in a downtrend and today’s rally represents
nothing but a bounce. From a price-action based perspective, the rally did not
have enough bullish momentum to carry higher through the 80.00 major
psychological level but did rally from support at the 79.00 level. Frankly
however these chart-based levels fall a distant second to the real driver of
today’s risk aversion: The news that point to a huge disappointment that the
optimism of Plan B has – for now – brought the market now closer to avoiding
the cliff.
Without the votes needed, the market
sees this as a stalemate and reacted swiftly Thursday evening – selling the Dow
futures off sharply over 200 points.
Past performance is not indicative of
future results
The
wick left behind after the initial sell-off shows that traders are not as
negative on the news after an evening to digest the reality of stalemate.
Past performance is not indicative of
future results
Notice
that the U.S. Dollar Index rally is nothing more than a bounce from levels at
which the greenback has been previously supported and as much as the buying is
based on news, there is some technical merit to this arguably choppy time frame
reaching “oversold” and the ceiling at 80.00 that is still untouched. The daily
chart is in a volatility market trend because the bearishness that can be seen
in the red GRaB candles has not yet dragged the 34EMA Wave lower into a
established “four to six” o’clock trend. I still see the 80.00 level being a point at which sellers will view this price as a resistance level to sell into.
As an active forex trader and Chief Currency
Analyst for IBFX.com I do write for a number of sites all over the web and I am
happy to say that I will be posting updates atwww.IBFXconnect.com. MyActivity Boardwill feature the trades from my
trading account as well as intraday commentary.
Start
the discussion! Questions? Comments. Leave it here at the Daily Forex Trading
Edge for Raghee to personally answer. Using the icons at the top of the article
to forward this update to a friend via email, post it on Google or Facebook or
simply print it out for reading later.
Forex trading is one of
the riskiest forms of investment available in the financial markets and
suitable for sophisticated individuals and institutions. The possibility exists
that you could sustain a substantial loss of funds and therefore you should not
invest money that you cannot afford to lose.
Posted By:
Raghee Horner
Raghee Horner, chief currency analyst for IBFX, provides her personal daily trading tips and insights through Dailyforextradingedge.com. An experienced trader with over fifteen years in the markets, Raghee is the co-founder of EZ2Trade Software and has taught her brand of technical analysis and charting strategies to students all over the world. She is an international author and has taught currencies, futures, and equities trading for over a decade.
The saga continues as we see the fiscal cliff “winners” and “losers” played out from sound bite to press conference to progress to letdown. Thursday night was the latter and the letdown of the rejection of so-called “Plan B” by House Republican leaders caused the market to re-think just how much optimism that had already been baked into the cake. Unwinding the “optimism position” was swift Thursday evening but it seems that as traders re-evaluate the situation on Friday - going into the weekend – optimism that the cliff will be averted is returning as equities pare their gains.
Technically the daily U.S. Dollar Index remains in a downtrend and today’s rally represents nothing but a bounce. From a price-action based perspective, the rally did not have enough bullish momentum to carry higher through the 80.00 major psychological level but did rally from support at the 79.00 level. Frankly however these chart-based levels fall a distant second to the real driver of today’s risk aversion: The news that point to a huge disappointment that the optimism of Plan B has – for now – brought the market now closer to avoiding the cliff.
Without the votes needed, the market sees this as a stalemate and reacted swiftly Thursday evening – selling the Dow futures off sharply over 200 points.
Past performance is not indicative of future results
The wick left behind after the initial sell-off shows that traders are not as negative on the news after an evening to digest the reality of stalemate.
Past performance is not indicative of future results
Notice that the U.S. Dollar Index rally is nothing more than a bounce from levels at which the greenback has been previously supported and as much as the buying is based on news, there is some technical merit to this arguably choppy time frame reaching “oversold” and the ceiling at 80.00 that is still untouched. The daily chart is in a volatility market trend because the bearishness that can be seen in the red GRaB candles has not yet dragged the 34EMA Wave lower into a established “four to six” o’clock trend. I still see the 80.00 level being a point at which sellers will view this price as a resistance level to sell into.
As an active forex trader and Chief Currency Analyst for IBFX.com I do write for a number of sites all over the web and I am happy to say that I will be posting updates at www.IBFXconnect.com. My Activity Board will feature the trades from my trading account as well as intraday commentary.
Start the discussion! Questions? Comments. Leave it here at the Daily Forex Trading Edge for Raghee to personally answer. Using the icons at the top of the article to forward this update to a friend via email, post it on Google or Facebook or simply print it out for reading later.
Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
Raghee Horner