The Precise Take – Weak Dollar lifts equities overnight ahead of slow news week

Leaders Analysis:  Overnight, the US Dollar has plummeted to support by the October lows near the 75 level, after selling off from just shy of the 77 level last week.  If it follows the pattern it has made throughout the downward trend channel beginning in July, it will slowly edge lower over the coming week to test the bottom of the channel (74.00 to 74.30).  Gold is not surprisingly up overnight as well.  30 Year T-Bond futures continue to maintain support ahead of a large auction week, and the EuroYen is consolidating in a wedge against resistance.  Accordingly, these are the two leaders to watch.

Medium Term Update:  The only scheduled news today is a 3 Year Treasury auction, which traders will look to for clues as to demand for the upcoming 10 Year (tomorrow) and 30 Year (Thurs) auctions.  With no other major news until the Treasury Budget on Thursday at 2:00 pm, the ES has some time to attempt to test and perhaps make new highs without news impediments.  Key resistance is now the confluence of weekly R1 at 1081.75 to monthly R1 at 1084.00, with the highest price market profile point of control just above at 1085.75.  Shorts will be ready to jump in Friday ahead of Retail Sales on Monday if the ES looks weak near highs.

Trading Today:  Overnight, the ES has traded up to the lower edge of the value area in green below.  If it accepts in this area, it could be used as a launch pad to new highs.  However, being a bit overbought it may need to test the blue value area once more before attempting to head higher.  Accordingly, the aggressive long play is to…

Continue reading here.