Wednesday October 13, 2004 - 19:15:14 GMT
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Forex: Air Traffic Control Needed for Guidance
The day was marked by the broad dollar buying in the morning during the NY session, but after some boring afternoon trading the market picked up steam. Many traders were on the wrong side of the market when the market turned viciously in the afternoon when US Treasury Secretary Snow made some comments regarding the debt in the US. Snow said that the Treasury will advise the government on debt ceiling moves and that the debt limit will not be breached along with saying the debt ceiling is a day to day issue. This turned the market on its heels as the euro rallied from 1.2270 to 1.2360, and the dollar was smoked across the board and gave back almost all of its gains from the morning. The dollar made a morning high of 1.2660, but topped out there and made a corrective turn to make a low of 1.2505. With all of the traders looking the other way this led to large covering and sheer terror hit the market as nobody knew what was going on and many were forced to cover there positions. The move was exaggerated when stops were hit in the market as well. The DOW gave away its gains as well as we are currently trading down 100 points a 135 point turnaround from where the move began. Crude oil once again made its way higher after being down most of the day, it rallied towards $54 dollars again, and was +$1.15 late in the trading day. Also, the rebound in crude oil prices has been led by a rise in heating oil to fresh all time highs of $1.498 on expectations of price pressures over the North American winter. There is another debate tonight between President Bush and democratic candidate John Kerry tonight and as we have seen with the past two debates any clear winner of the debates has moved the market in a correlation. Dollar seems to strengthen when Kerry looks like a winner and the reverse happens when President Bush looks like the winner. Stay tuned for what happens next but clearly this market remains in a range and until after the election we should stay contained in this range and not look towards any trends to take place until possibly the New Year ushers in.
Technically Speaking: The Euro still looks bearish on the daily charts and with the late session bounce we see better levels to get short. The slow stochastic is reading 52.62 on the dailies and the Relative Strength Index is neutral as well at 54.20. With the late afternoon bounce we have cleared out most stops in the market and the old saying goes buy the rumor sell the facts.
Gain an Edge: We will sell euro on the bounce towards 1.2360-1.2380 with a stop at 1.2450 and our objective is for a move to continue lower towards 1.1500.
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