Friday November 12, 2010 - 03:12:17 GMT
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E-mini S&P 500 Finishes Lower in Light Trade; Watch for Weekly Reversal Top
The December E-mini S&P
500 finished lower on Thursday on light volume in a holiday driven trade. This
market did make an attempt to sell-off but failed to even take out Thursdayâ€™s
low at 1201.75 before selling pressure subsided.
The range this week is
1224.75 to 1201.75. The retracement zone of this range is 1213.25 go 1216.00.
This area could be tested again tomorrow. If this market is topping, then it is
likely to stop in this zone and form a secondary lower top.
The E-mini S&P 500 is
also battling a weekly closing price reversal top. Last weekâ€™s close was
1222.00. This price is likely to be defended by the bears if the market makes
it that high. A close under this price will form a simple weekly reversal, but
a close under 1213.25 will make the reversal top more impressive, setting up a
possible 2 to 3 week break into 1196.25 to 1189.50.
The EUR USD continued its
sell-off on Thursday after turning the main trend down on the daily chart
earlier in the week.
Downside momentum indicates
that the break is likely to continue down into an uptrending Gann angle from
the 1.2644 bottom at 1.3544 on Friday.
Based on the main range of
1.2587 to 1.4282, the retracement zone at 1.3510 to 1.3434 is also a potential
The area to watch for a
technical bounce is at the support cluster at 1.3544 to 1.3510. This area is
being created by the Gann angle and the 50% level.
The main catalyst behind the
current weakness is debt issues in Ireland
is also feeling pressure from the harsh austerity measures which may be the
cause behind the lack of growth in third quarter GDP.
On the upside the Euro is
walking down a Gann angle at 1.3802. Continue to look for the weakness to
continue as long as this market remains under this angle.
U.S. Veteranâ€™s Day holiday is taking its toll on stock market volatility and
volume on Thursday. The stronger Dollar is helping to keep downside pressure on
the equities markets, but there doesnâ€™t seem to be a strong enough seller
present in the market to drive the December E-mini S&P 500 through the
previous dayâ€™s low at 1201.75.
in the Euro Zone peripheral countries of Spain
continue to weigh on the Euro, encouraging traders to shed risky assets, but
this hasnâ€™t translated into the heavy selling pressure we are likely to see on
Friday when the marketâ€™s reopen at full strength.
the December E-mini S&P 500 is in a position to post a weekly closing price
reversal top. At this time, it has confirmed a daily reversal top from earlier
in the week, but a weekly reversal will be a strong indication that this market
is set up for a minimum 2 to 3 week correction. Based on the near-term range of
1167.75 to 1224.75, the most likely downside target would be a retracement zone
at 1196.25 to 1189.50.
December Euro is down sharply on Thursday as weak data from Spain demonstrated that the
crisis-hit European Union countries will continue to put selling pressure on
the single currency. This morning Spain reported a disappointing
steady gross national product. Combined with the Irish debt issues brewing,
traders are currently implementing a â€śsell first, ask questions laterâ€ť
failing to show growth during the third quarter, the data from Spain
may be showing that the countryâ€™s new tougher austerity measures may be taking
their toll on growth and expansion. One telltale sign that traders are taking
the matter seriously is the widening of the spread between Spainâ€™s 10-year benchmark bond
yield and the comparable German bond. On Thursday, the spread reached 215 basis
points, a five month high.
Technically, the main trend
is now down on the daily chart following a break through two main bottoms at
1.3733 and 1.3698. Based on the main range of 1.2587 to 1.4282, watch for the
correction to continue down into a retracement zone at 1.3434 to 1.3234.
Earlier today selling
pressured pushed the Euro through an uptrending Gann angle at 1.3727. The
failure to hold this level is likely to trigger a further decline into another
Gann angle at 1.3524. There are no major support clusters set up at this time
which means the market could attempt to test several areas before establishing
On the upside, a downtrending
Gann angle from the 1.4282 main top comes in at 1.3882 today. This angle is
followed by additional angles at 1.4082 and 1.4182.
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