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Charts of the Day:
Bullish Equity, Bearish Cable. Both With Little Time
In trade during the latter part of the last full week in August the US$ was mixed across the board, as traders remained unable to push S&P futures through 1030 resistance, something that was directly connected to the dollar holding support.
The correlation between S&P futures and dollar index trade is running around the 90% mark at the moment, and can be seen in the EUR/USD and CAD/USD pairs.
The US$ gained a little after the Thursday Weekly Jobless Claims numbers and GDP numbers came in close to expectations. However, traders did not pay too much attention to these movements, as a huge turning point appeared around 90 minutes into Thursday’s session that lasted 30 minutes, and is still holding 24 hours later, which sent the stock market from deep red, into the positive close.
This swing point from the 1014 low to a 1033 high on the S&P influenced the Usd value, which fell against the euro for 180 pips and 100 pips against the pound. “Technically, this turning point on the futures signals for higher target and maybe even the last bullish leg, near to the 1050 resistance area” said TheLFB Elliott Wave Team, “especially once the 1037 high from 25th of August 2009 is taken out ” they added.
Traders saw TheLFB Trade Plan of the Day for Cable follow through on the long side after Friday’s GDP announcement from the U.K. and now the technical view takes over.
Maybe, just maybe, if equity markets fall going next week, after a potential S&P futures top around 1050, the short side of the trade plan for cable will come into play. In that case, it will match perfectly with our bearish Elliott Wave view.
For full detail of both the cable and S&P futures technical set-up, please visit our complimentary Chart of the Day area.