Tuesday November 9, 2004 - 13:48:31 GMT
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GFT Daily Forex Market Commentary Tuesday, November 09, 2004
GFT Daily Commentary by Cornelius Luca, currencies analyst, Global Forex Trading (source: https://www.gftforex.com/resources/daily.asp?date=1192004)
The heavily oversold dollar recovered on Monday from new lows for its stubborn downtrend with the help of ECB President Jean-Claude Trichet. In a repeat of his successful verbal intervention from January, Trichet argued that the euro gains were “brutal;” while he never inferred any kind of central bank intervention, his statement triggered some profit taking on the long European currencies positions. It’s too early to call for a dollar recovery, but there is a high risk, particularly given the oversized short dollar positions. Hold long dollar positions with a tight reversal level.
Euro/dollar fell on Monday from a new high for its uptrend of 1.2986 and closed lower. Its decline was not sufficient to form a strong bearish reversal signal on the daily candlestick chart, so be more cautious than usual if holding short euro/dollar positions.
The pair must challenge and break below the support between 1.2860 and 1.2840. If successful in penetrating this area, then look for a test of the support at 1.2800, and the uptrend would be over. However, it would take a break below 1.2755 to signal an aggressive decline into next week and to 1.2685. Once again, a break below this level would signal a retest of the 1.2630 low.
If the market manages to preserve the profitable uptrend, then the pair will re-test the resistance at 1.2950 and possibly even the 1.2986 peak. Should the rally accelerate ahead of the expected Fed rate hike on Wednesday, then the euro/dollar could stretch as high as the 1.3085 area, but this is rather unlikely at this point.
Oscillators are rising.
NEAR-TERM: Mixed with downside risk
MEDIUM-TERM: Slightly bullish
Dollar/yen shot down twice in early trading on Monday and coined a new low for its downtrend at 105.20, pretty much reaching the downside target of the 105.60 from the 50-point pivot. Its subsequent recovery lacked oomph, and the pair finished the day slightly in the red. Expect another test lower; if it fails, which it should, without the helping hand of the Bank of Japan, then the pair could make a more sustained recovery. But let’s not get ahead of ourselves.
For now, be prepared for another attack of the support between 105.20 and 105.10. A break below this area would increase the confidence in this decline and the pair could take a stab at the next 50-pip pivot at 104.50, which targets 104.00 and 105.00.
Immediate resistance comes at 105.80. If the pair can recover above the 106.10 area, then look for a test of the key to 50-point pivot at 106.75, which targets 106.25 and 107.25.
Oscillators are declining.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Slightly bearish
LONG-TERM: Slightly bearish
Sterling/dollar fell on Monday from a new uptrend high of 1.8615 and formed a bearish reversal signal on the daily candlestick chart. Attractive as it may be to call the end of the uptrend, much more confirmation is needed for this call, even though the rally is overbought.
The pair must first make a convincing break below the nearby support at 1.8500 and then below 1.8470. If successful, the sterling/dollar should challenge 1.8415. A break lower would signal the end of the uptrend and the pair would then test the support at 1.8370. Distant support remains at 1.8300.
If it can resume its uptrend, the pound must break above 1.8615. A move higher would resuscitate the uptrend and make a case for a test of the resistance at 1.8660. Distant resistance remains at 1.8770.
Oscillators are rising.
MEDIUM-TERM: Slightly bullish
LONG-TERM: Slightly bullish
Dollar/Swiss recovered on Monday from a new multi-year low of 1.1754, but failed so far to jeopardize short medium-term positions.
If it manages to recover further, dollar/Swiss franc must break above 1.1940 and then attempt to retest the resistance at 1.2000. Further resistance remains between 1.2090 and 1.2115. Once again, a break above this area would signal a further attack to 1.2200.
If this weakness resumes, then the pair should challenge its new low of 1.1754. A break below this level would signal a slide to the further support at 1.1670. Distant support now comes at 1.1620.
Oscillators are edging lower.
DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.
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