Dollar Juggernaut Continues To Dominate Majors

Daily FX ^ | November 18, 2005 | Sam Shenker

[RWR8189]

Technical Overview

· British Pound Heads To 1.7000
· Swiss Franc Sees 1.3500 In Its Future
· New Zealand Dollar Fails To Capture .6900

Traders Corner:
Reality or wishful thinking, it’s a very delicate balance when it comes to trading. As a trader I always learned not to let the wishful thinking cloud my judgment. I never let such notions as hopes and dreams distort the reality of the market. At one point when I found myself grasping at straws in a sinking trade I realized that no matter what I think, wish or hope, the market will do what its need to do, the only thing I can do is accept reality of being wrong, close the trade, take a loss and stay out until I can get myself to think rationally. Most traders instantly feel the urge to get their money back from the market and start trading with a vengeance and by doing so make even more mistakes and sink their account deeper into loss. Never let emotions cloud your judgment, never try to instantly make your money back, you will only lose more. The best thing to do is to walk away and try again after clearing your head no matter how long it takes, that what separates professionals from amateurs. Please feel free to email me at sshenker@fxcm.comwith your comments. 

EUR/USD – Euro bulls once again failed to push the greenback above the 1.1700 handle as their attempts were repeatedly thwarted by the defending dollar longs. A counterattack and the move to the downside will most likely see the greenback bulls on the single currency defenses around 1.1653, a level marked by October 22 daily low with sustained momentum to the downside most likely seeing the greenback bulls taking on the euro bids around 1.1546, a level established by the October 17, 2003 daily low and a gateway toward the psychologically important 1.1500 handle. A break below the 1.1500 figure will most likely see the pair head toward the 1.1379, a level established by the November 7, 2003 daily low, at which point the dollar longs will most likely consolidate their gains before continuing their advance. Indicators are favoring dollar longs with both momentum indicator and negative MACD below the zero line, while extremely oversold Stochastic gives the euro bulls a chance to retaliate.

Key Levels & Technical Indicators


USD/JPY –  Japanese Yen longs once again managed to defend the psychologically important 120.00 handle after another attempt by the greenback longs to crush the yen opposition. A counterattack by the yen longs will most likely see the pair head toward the 118.00 figure, and with a break to the downside most likely seeing the yen long push their way toward the 117.29, a level defended by the 20-day SMA. A further move to the downside will most likely see the yen bulls test the dollar bids around 116.87, a level established by the November 8 daily low. Indicators remain supportive of the dollar longs with both momentum indicator and MACD treading above the zero line, with ADX above 25 at 42.60 signaling an existence of a maturing trend not a direction of one, while overbought Stochastic adds to the trending outlook.

Key Levels & Technical Indicators


GBP/USD –  British pound bulls found themselves at the mercy of the greenback longs after the pair slid below the 1.7200 handle. A further attack by the dollar bulls will most likely see the cable longs retreat toward 1.7086, a level marked by the November 20, 2003 daily high. A further collapse of the cable’s defenses will most likely see the pair break below the psychologically important 1.7000 handle and target the pound bids around 1.6877, a level established by the November 28, 2003. Indicators are favoring dollar longs with both momentum indicator and negative MACD below the zero line, while overbought Stochastic give the sterling longs a chance to retaliate.

Key Levels & Technical Indicators


USD/CHF – Swiss Franc longs once again face the prospect of setting a new 2005 high after greenback longs managed to push the pair back above the 1.3200 figure.  A further move to the upside will most likely see the greenback longs target the Swissie offers around 1.3389, a level established by the October 3, 2003 daily high, and with sustained momentum on the part of the dollar longs will most likely seeing the greenback bulls head above the psychologically important 1.3500 figure and tackle the Swiss Franc defenses around 1.3525, a level marked by the September 29, 2003 daily high. A break above the 1.3500 will most likely see the Swiss Franc retreat toward the 1.3780, a level marked by the November 6, 2003 daily high. Indicators are favoring dollar longs with both momentum indicator and positive MACD above the zero line, while overbought Stochastic gives the Swissie longs a chance to retaliate.

Key Levels & Technical Indicators

USD/CAD – Canadian dollar bulls found themselves on the other side of the trade after their counterattack against the US dollar positions failed to break below 1.1853, a level marked by the 23.6 Fib of the 1.2730-1.1592 CAD rally. A break above the 1.2000 figure will most likely see the pair test Loonie’s defenses around 1.2027, a level established by the 38.2 Fib of the 1.2730-1.1592 CAD rally, thus seeing the Loonie bulls give up the control to the psychologically important 1.2000 handle. A further collapse of the Canadian dollar defenses will most likely see the greenback take on the Loonie offers around 1.2159, a 50.0 Fib of the 1.2730-1.1592 CAD rally. Indicators are favoring dollar longs with both momentum indicator and positive MACD above the zero line, while neutral oscillators give either side enough room to maneuver.

Key Levels & Technical Indicators


AUD/USD – Australian dollar bulls continued to mount defenses around the .7300 handle as greenback longs consolidated some of their gains and once again pushed the pair lower. A move below the .7300 handle will most likely see the Aussie bulls retreat toward their defensive position at .7263, a level established by the fresh 2005 Low, with a further move to the downside most likely seeing the pair tumble toward .7224, a level marked by the October 19, 2004 daily low. A sustained momentum on the part of the greenback bulls will most likely see the Australian dollar longs give up more territory as they retreat toward the .7133, a level established by the August 14, 2004 daily low. Indicators are signaling trading conditions with ADX above 25 at 32.93, signaling an existence of a trend, not a direction of one, while both momentum indicator and negative MACD remain below the zero line, with oversold Stochastic adding to the trending outlook.

Key Levels & Technical Indicators


NZD/USD – New Zealand dollar began their retreat after the price action stalled around .6870, a level established by the 23.6 Fib of the .7468-.6681 USD rally. A counterattack by the greenback longs against the Kiwi bulls will most likely see the US dollar bulls push the pair back below the .6800 figure, and with sustained momentum seeing the pair taking on the New Zealand dollar bids around 6773, a level established by the July 28 daily low. A further break to the downside will most likely see the pair tumble toward the .6687, a 2005 Low. Indicators are signaling trading conditions with ADX above 25 at 25.43, signaling an existence of a trend, not a direction of one, while both momentum indicator and negative MACD remain below the zero line, with neutral oscillators give either side enough room to maneuver.

Key Levels & Technical Indicators


Daily Chart Analysis


Daily Chart - USDCAD remains confined to a large channel that dominated the price action since May, with the latest swing to the upside bouncing channel’s upper boundary. A reversal from these levels will most likely see the USDCAD head toward the 23.6 FIB and with subsequent turnaround seeing the cross break above the channel’s upper boundary. 

Intra-Day Pivot Points

[Tazzer]

Huh!??? This hasn't been in the hallowed press?!! I don't understand. But the hallowed press is telling about the housing bubble that is going to burst any minute now. ...and those deficits the Republicans are running.

RWR8189, the Kiwi isn't a major/sar.

[Jaysun]

RWR8189, the Kiwi isn't a major/sar.

I love the Kiwi. I trade NZD/USD more than any other pair. The spreads are nice.

[cloud8]

Forex is all very interesting if somewhat mysterious to a smalltime investor like myself, but kudos anyway to President Bush for staying the course on the U.S. economy, and I hope Soros is losing billions if he's still in the game. Currency traders aside, the cheap dollar must have meant that other countries bought our stuff, and demand for U.S. products helped to bring us out of the clinton recession. Also. the article doesn't say a thing about that other powerhouse economy, China, and the yuan isn't mentioned until your list of keywords.

[Tazzer]

"I love the Kiwi. I trade NZD/USD more than any other pair. The spreads are nice"

We'll let others not regard the Kiwi as a major, for when the USD is a cross currency, like the NZD/USD, then I'm in. [Tho' the Aussie bit me Wed. ;

[dennisw]

Gold is going up in dollar denominated terms at the same time as the USD is dominating. Interesting

[reformedliberal]

I heard recently that Soros has a new obsession: the old line techs. I wonder if that was the push behind yesterday's rise in the NASDAQ?

[hubbubhubbub]

This is early stage two of the Gold Bull.

Stage one ('01-'03) - Gold rose against a declining dollar.
Stage Two (4q05-?) - Against a rising dollar and against all fiat.

[Lonesome in Massachussets]

From the headline, I thought this was about the New York Yankees.

[cloud8]

> ...yesterday's rise in the NASDAQ?

Prolly helped by Google's passing $400.