Friday November 12, 2010 - 14:24:12 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 Japanese Yen is trading
higher against the U.S. Dollar as global equity markets declined overnight,
pressured by reports showing that the Euro Zoneâ€™s biggest economies may be
Increased risk aversion in
the market is the primary cause of the strength in the December Japanese Yen.
Traders feel that a slow down in Europe will
mean weaker peripheral nations will struggle fulfilling their budget
requirements. This may lead to more borrowing and increased budget deficits.
Despite the overnight
strength, it looks as if the Dollar will close the week higher versus the
Japanese Yen. However, weakness in the Euro Zone has helped the Yen climb to
its strongest level in almost two months against the Euro.
While stock market pressure
this week has taken care of the Yenâ€™s strength versus the Dollar, Japanâ€™s
Economy Minister Banri Kaieda said the country canâ€™t combat gains in its
currency alone. The Yenâ€™s gains against several major currencies this week are
primarily a reaction to the decline in risk sentiment.
Traders are still talking
about what the Bank of Japan can or should do about stemming the gains in the
Yen since intervention didnâ€™t work.
Technically, the December
Japanese Yen turned the main trend down on the daily chart earlier in the week,
but slammed into near-term support in a retracement zone at 1.2190 to 1.2124.
This zone was created by the short-term range of 1.1913 to 1.2466.
A break through this zone
could trigger even further losses with 1.2057 to 1.1960 the next downside
A hard sell-off in U.S.
equity markets today could send risk averse traders into the Japanese Yen at
the expense of the Dollar.
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