Two Forex Pairs Stand Out

S/P futures, the global market read on daily risk tolerance, found support at a major swing point overnight, and in finding buyers at 1050 allowed the dollar index to find sellers at 88.80. The automated way in which global markets stay connected throughout any given 24 hour period allows forex momentum to follow the buying or selling of risk, (the buying or selling of stocks).

The inverse Equity/Usd moves are connected each day, the only question is; to what degree, and right now it is as close to 100% correlation as traders will ever see. S/P trade will need to break 1075 and then 1105 to allow forex pairs to break the stranglehold that the Usd has them in.

Conversely, for the Usd to be able to push the dollar index through a resistance point that has held steady in 2004, 2005, 2008, and 2009, the S/P market will need to be breaking lower to test 1035 and 1015.

Without these price-points being tested, forex traders will be looking at intra-day trading that is contained within the previous session high or low. Usd/Jpy is bouncing off 91.40 support at the 100-day SMA, Usd/Cad has the 200-day SMA at 1.0460, but outside of those two, most forex pairs are now free and clear of Daily chart price points of note.

Dollar Index
The dollar index is at the 88.50 resistance area that sent it lower in 2004, 2005, 2008, and 2009. There seems no reason to think that the same will not happen again if equity markets find support. If equity sellers drive the S/P under 1035, the index will test 90.00, but whatever happens in other markets that may be the tipping point for a Usd reversal.

The Usd up-trend is expected to stall at 90.0 highs, as long-term resistance points approach. The inverse Usd/Stock correlation is in place. Daily trading range is high at 2.2%.

The dollar touches every part, of every global market, every day. It is the unit that central banks rely on as a reserve currency, and is the vehicle used to trade all global commodities on international markets. The index is made up of Euro 58%, Yen 13%, Pound 12%, Canadian 9%, Swedish Kroner 4% and Swiss Franc 4%.

S&P Futures
Global equity daily chart trade is holding solid sideways channels that will not break, either long or short, and hold. Volatility is increasing, along with the daily trading ranges.

S/P futures are at the critical 1050 swing point. Watch for the Weekly chart hold above 1105 to trigger 1120 tests, or below 1050 to trigger a 1025 move. Daily trading range is very high at 3%.
S/P futures trade reflects the risk sentiment seen in each of the main global stock markets. Futures trade runs 23 hours a day and reflects what is being priced in regard to fair value in anticipation of the cash market opening in each region. Risk tolerance = Higher equities and lower Usd. Risk aversion = Lower equities and higher Usd.

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