Friday October 29, 2010 - 01:12:16 GMT
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Forex Hound - www.forexhound.com
December Treasury Bonds Post Daily Reversal Bottom
After early session pressure, the December Treasury Bonds
posted a daily closing price reversal bottom which may be an indication that it
has run out of sellers.
Thursdayâ€™s action suggests that traders may have begun the
process of squaring up short positions ahead of next weekâ€™s Federal Open Market
Earlier in the week, T-Bonds were pressured by a story in
the Wall Street Journal which said the Fed may be buying fewer assets as part of
its new quantitative easing program.
The charts indicate a minimum 2 to 3 day rally can be
expected with 131â€™20 to 132â€™11 a possible upside target.
Better economic news from the Euro Zone coupled with an
improved U.S. Weekly Job Claims report helped drive traders into risky assets,
boosting demand for the Canadian Dollar.
Although economic news may have underpinned the market
during the New York
trading session, it was a report circulating regarding the U.S. Federal Reserve
that initially fueled the rally.
Rumors began circulating last night that the Fed surveyed
dealers about its upcoming quantitative easing plan. Traders were questioning
whether the Fed has any idea as to how much, or how, to apply additional
quantitative easing into the market. This indecision pressured the Dollar
because it presented the Fed with credibility issues.
Based on a Wall Street Journal article on Wednesday
predicting the Fed would apply less than $1 trillion of quantitative easing,
the Dollar rallied. Todayâ€™s story erased all of those gains but also put more
uncertainty back into the market.
Technically, the December Canadian Dollar is trading inside
of a range of .9346 to 1.0005. This range created a retracement zone at .9676
to .9598. This range has also stopped the last two breaks.
Based on the short-term range of 1.0005 to .9625, .9815 to .9860
is the next upside target zone.
Gann angle resistance is at .9785. Gann angle support is at
This current chart set-up suggests that the market is
compressing, leading to lower volatility. The market may sit like this for a
few days as traders await the November 3 Federal Open Market Committee meeting.
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