Monday, 30 April 2012

Last day of the month....

Good morning Monday!!!

Hope E$ longs had locked in some profit on Friday's rally ahead of the weekend.

Last day of the month, Japanese Golden Week, Labour Day tomorrow and US employment figures on Friday should see market players take a more passive stance today.

CFTC speculator's positions revealed that net E$ short has reduced somewhat to -113,376 from -118,125.
Order book still show buy stops at 1.3280 and 1.3320 and sell stops below 1.3175.

Looking at the chart, E$ is still contained within the raising channel with the falling trendline hovering just overhead around 1.3280/300.

I still see 2 way trading opportunities today but one should not get overly aggressive.

1.3165/90 to hold and 1.3280/300 (1.3320/30 news induced) to cap on first test.
Note that we are in the full moon zone from this coming Thursday to next Monday.

All the best and have a great Labour or May Day holiday tomorrow!

Update1: Will call off the buy side due to conflicting signals and will stay out for now.

Friday, 27 April 2012

The rain in Spain, stays mainly in the ......

TGIF dear friends!!

Boy, are we surprised that Spain got downgraded... "wink".

E$ continues to pretty much hold the baseline at 1.3180. Any further push should see 1.3135/45 supporting. From what I have gathered, the same Asian sovereign name was seen on both end dictating the 1.3180 to 1.3260 range.

After yesterday's moves, the large offer and stop loss orders mix at 1.3240/50 were flushed. This morning, following the news release by S&P, small sell stops below 1.3200 were taken out. Now, I reckon we should have new buy stops built up at 1.3260/80 region by the new shorts in reaction to the downgrade.

Technicals continue to support another wave higher towards 1.3280/300 which somehow coincides. Do note that its month end and liquidity is sub-optimal, therefore price action can be choppy. Admittedly, I was caught in the roller-coaster ride last night..... strong stomach, survived!

At this moment, I must warn that I am actually only neutral to slightly bullish the E$ beyond 1.3300. Sadly, I am only inferring based on what I have gathered looking at other currency pairs.

Whatever it is, stay focused on today's range and I hope to wrap things up before the weekend starts! :)

1.3170/80 to hold (1.3135/45 news induced) and 1.3280/300 target.
All the best and have a great weekend!

Thursday, 26 April 2012

Post FOMC......

Good morning folks!

One of the most tamed reaction post FOMC. Lots of 2 way tussle between bulls and bears through the whole of last night with buyers at 1.318ish and sellers at 1.323ish. That pretty much set the range for yesterday.

E$'s inability to push higher last night with price action stagnating around 1.322ish does make it look heavy for now. Upside momentum has waned and this increases the probability of E$ pulling back first before another attempt at 1.3240/50 for 1.3300.

I have mixed signals to the potential depth of this correction. Guess for the aggressive 1.3185/95 to hold and the conservative 1.3130/40.

E$ longs should take money off the table and scale in again based on the 2 levels and target 1.3280/300.
All the best!

Wednesday, 25 April 2012

E$ bears worst fear...... buy stops!

Good morning folks!

NZ, Australia & Italy are out today.

E$ continued to close firmer at 1.3196 for the day but still below the 1.3200/20 band. Is this intentional to create uncertainty or what??

Really nothing much to update here when the whole market is focusing solely on the FOMC statement in the early hours of Thursday. Don't you love it when the time has been brought forward from 2.30am to 12.30am (Sin/HK)?

Reported stop loss orders are residing at 1.3050, 13230-50, 1.3280 & 1.3320. Just like lightning, the chances of it striking the nearer targets are a whole lot higher. Having said that, do note that technical views are not formed by looking at stop loss orders. Rather, it is used to reinforce a technical view. So don't lose sleep if you do not have those information, life goes on  :)

E$ longs established in the past 2 days should place trailing stops (remember the advise in "Ready for Action?" dated 20 Apr 12) or if one is comfortable with the cushy profit.... take it, since the immediate resistance stands at 1.3210.

For today, 1.3165/75 to hold (1.3110/20 news induced) and 1.3300 to cap. (Minor resistance at 1.3210 & 1.3240).
All the best!!

Tuesday, 24 April 2012

Here is where it all ends......

Good morning folks!

What a way to start the week.... Netherlands PM Ruppe announced his government's resignation yesterday! That was the best excuse for the bears to push E$ through sell stop loss orders from 1.3130 to 1.3110 to touch a low of 1.3105 before Asian sovereign bids prevented further carnage. Despite the negative news, E$'s ability to hold 1.3100 may trigger a wave of short covering in the coming 48hrs.... FOMC the next excuse?

CFTC net E$ short positions should have increased further following yesterday's move and the next batches of stop loss order which should attract attention could be those residing at 1.3230/50 and 1.3280. This scenario fits well into my technical outlook as outlined in "Sitting on the fence..." (23 Apr 12) for an initial dip before rebounding for 1.3300. This is where the head and shoulder formation will deviate from the mirror image (see eclipse).

Barring any shockers, market does look like it wants to go into a lacklustre consolidation during Asian hours or even the whole of today. That being said, I would be a buyer on dips to position myself for the next move higher.

1.3120/35 to hold (1.3080/90 news induced) and 1.3200/20 to cap. Still maintaining 1.3300 as target for this round until otherwise advised.
All the best!

Monday, 23 April 2012

Sitting on the fence....

Gooood morning Monday!!!

E$ sure has its way of not showing its side!! Based on the close on Friday at 1.3217, I cannot confidently conclude that E$ has closed above the resistance band of 1.3200/20 with the next bullish move towards 1.3300. All I have are.... it was a firm close for the week, CFTC speculative accounts have increased their net E$ short of -118,125 vs last week's -101,364 and......

[The communique of the IMFC says global economy recovering
gradually, the monetary policy of the advanced economies should stay
accommodative, but further actions are needed on fiscal consolidation
and government debt reduction. Global collaboration is key to sustaining
growth everywhere and to ensure stability. Welcome the strengthening of
firewalls and the G-20 agreement to enhance IMF resources.]
Source: MarketNews International


1.3300 (see circle in chart) may still be the ultimate target for this round but for today, I will just stay focus on the potential range.
1.3120/30 to hold (1.3080/90 news induced) and 1.3240 to cap (1.3300/20 news induced) on first test.

All the best and have a great week ahead!!

Friday, 20 April 2012

Ready for action?

TGIF friends!!!

E$ was pretty well behaved yesterday until rumour of a French ratings downgrade drove price down to 1.3069 low. This kind of choppy price action is expected especially when market is trading within a tight range. Despite all the noise, E$ once again closed firmly above 1.3100 at 1.3137. This is a bullish signal but not to be read in isolation.

I expect the E$ to continue to hold the range of 1.3055/65 to 1.3200/20 and a break and close on either side will show the way in the coming week. That being said, after taking all available signals into consideration, I see a slight skew towards a potential break towards 1.3300 (see chart).

Stop loss orders can be found on either side but gathered that the large bulk is residing at 1.3215/20.

For today, 1.3090/110 to hold (1.3055/65 news induced) and 1.3200/20 to cap (conservatively).

Not too sure how much uncertainty IMF's meeting, over this weekend, has on the market but take profit if you have a decent gain within the range and enjoy your weekend!
All the best!

It is never wrong to take profit ahead of your target. But it is a cardinal sin if you allowed the market to erase off all your gains!!

Thursday, 19 April 2012

Still stucked....

Good morning folks!!

2 things you can do now.... 1. sell now and walk away with around 60ish pips profit  2. put on a trailing stop and brave the Spanish bond auction result.

Same chart, same range but different phase. No price for guessing, the next phase seems to be "up" to challenge the 1.3200/20 resistance band after E$ tested the support band at 1.3058 yesterday.

Just to take another step further, one would notice that E$ should start to turn down to retest the neckline and subsequently lower (based on the mirror image). For that phase, I will not be too quick to advise but I am mentally prepared for an expanded range to 1.3300.

For today, 1.3090/10 to hold and 1.3200/20 to cap. A close below 1.3055/65 or above 1.3200/20 will have important implications.
All the best!!

My trading philosophy is simple...... its more crucial to read the daily range right than to make a right call on a trend. Learn to listen to the market and react, leave the predictions to wizards with the crystal balls.

Update1: For E$ longs, use 1.3200/20 as a guide to take some profit and NOT to establish new short. Price action with firm momentum has increased the probability of a sustainable break above the resistance band. Better to err on the side of caution.

Wednesday, 18 April 2012

Limbo zone

Good morning folks!

Each time when other currencies were having fun on risk on days, E$ always gets caught between tectonic plates as EURxxx ie EURAUD, EURCAD & EURJPY sprang to life. That aside, I reckon we may continue to be in this state at least till after the Spanish bond auction tomorrow.

A$ has retested the bear channel trendline and along with USDJPY, both rebounded strongly. But they should take a rest at this stage. Incidentally, the risk of a major risk off event has come off significantly after recent A$ and USDJPY's turnaround at major support levels.

Based on the past 24 hours price action in E$, it is highly likely that it will correct Monday's rally. Quite similar to the mirror image in the eclipse on the left (see chart). Nothing exciting but range trade within 1.3055/65 to 1.3200/20 on first test.

For those who are looking for big moves, like I always say.... go play 36 holes. But don't forget, gems can be found in tight ranges too!  :)
E$ Head & Shoulder formation
All the best!

Tuesday, 17 April 2012

Go for a nap, my teddy bear

Good morning folks, hope everyone had another great start to the week!

In my previous 2 write-ups titled "Turn of event" and "Bears awoken", you would have noticed that I was apprehensive in being too overly bearish the E$ for this round. Yesterday, I briefly mentioned the eclipses I drew but left it without more detailed elaboration. Let me now share my thoughts with you here.

Cross referenced the E$ with the A$ has helped in one way. The other was the mirror image (you can't be serious????). Notice the price action in the eclipse on the left, a dip into the 1.30ish zone saw a strong bounce back into 1.3200 (in reverse). Subsequent test of the 1.3000 baseline seemed to have similar reaction though to varying degree of rebound. Those observations coupled with other simple technical indicators have helped reinforced my view.

So what's in store for us today after overnight's strong performance? A strong close above the 1.3100/20 resistance band has formed a bullish piercing pattern. This has increased the probability of a potential follow through from yesterday's recovery.

1.3055/65 to hold and 1.3200/10 to cap (1.3250/60 news induced).
All the best!

Monday, 16 April 2012

Bears awoken....

Good morning MONDAY!!!

So selling rally was indeed a better proposition and E$ is now back to testing the previous low of 1.3003 having flushed another batch of sell stops at 1.3050/20. I am quite sure the market is eyeing on more sell stops below 1.3000 and 1.2970/60 but risk/reward does not favour holding on to the shorts for now.

At this point of writing, market is trading at 1.3015 and I would advise shorts to take the money off the table. Oversold technicals should limit how much more the E$ can fall from here at this very moment. If consolidation kicks in, I would expect a counter-directional move to unwind the oversold condition where we can look for opportunity to sell into.

Just for discussion purpose, I have drawn 2 eclipses in the chart below to highlight the mirror image of this Head and Shoulder formation. Are we at that stage or have passed it and ready to break down. If so, I will revive the target of 1.28/2700 again. I need further technical confirmation but in the meantime, I shall not delay this blog since market is moving.

Strategy for now: Square the shorts and await rally to re-establish new shorts. Update to follow.
E$ Head & Shoulder Formation
Update1: Low so far 1.2995, option barrier at 1.3000 and some sell stops beneath were triggered though more are lurking below 1.2970/50. However, in an oversold environment coupled with short term momentum turning up, it does increase the probability of E$ consolidating with upside bias. Risk/reward favours going long at current level (1.3010) with a tight stop. Then look to sell rally into resistance band 1.3100/20. A close above the band turn short term bullish for a retest of 1.3200/20.

Update2: One should start scaling out the long E$ above 1.3070 as short term indicators are reaching overbought level. Call it a day and look for new opportunity tomorrow. If you want to stay on for a test of 1.3100/20, don't forget your trailing stop profit. Time to go for a jog before bed!!

All the best!

Friday, 13 April 2012

Turn of event....

TGIF friends!!

As expected, E$ squeezed higher to the resistance band, flushing out stops and printed 1.3212 high overnight before falling back to consolidate around 1.318ish.

Something has changed the dynamics of the market yesterday. AUDUSD has broken out of the bearish channel and upward momentum has picked up significantly. If we scanned across the other currency pairs, its starting to reveal that the recent USD rally may have potentially been crippled. So for the USD bulls out there, be tame!

If the above is panning out, it only means the EURxxx are going to stay under pressure (remember E$ is the new USD?) especially the EURAUD.

As for the E$, as long as it stays below the resistance band 1.3200/30, we should still be range trading with baseline at 1.3030 for now. Unlike AUDUSD, E$ has not yet broken any critical level to invalidate its short term bearish view but one has to be aware of the bigger picture ie. USD may start weakening again. I will put the intermediate target of 1.27/2800 on hold for now since probability has skewed which exposes E$ to potentially expand its range with top boundary stretching to 1.3300/50.

I hate this but have to admit that there are conflicting signals, therefore I will lightweight E$ and seek more directional plays in AUDUSD and EURAUD. Will update when I get into the groove of things.

1.3120/30 to hold (1.3030/50 news induced) and 1.3200/30 to cap (a close above 1.3230 will invalidate short term bearish view)
All the best and have a great weekend!

Thursday, 12 April 2012


Good morning, friends!

E$ continues its consolidation with an upside bias, forming higher highs and higher lows in step fashion.
Buy stop orders were triggered as expected in the 1.3150/60 region before it drops back towards 1.3100.
Heard the next batches of stops are lurking around 1.3190/00 and 1.3020/30 region.

The main reason why I took longer to write today's blog is quite simply.... I don't know what to write but to say "Ditto" to yesterday's.

Looking at the mirror image of the head and shoulder formation (see eclipse), I hate to say this but we are probably in for some serious consolidation.

A few considerations at this stage:
1. Market got overly bearish after last week's plunge towards the neckline
2. SNB re-drawing the line for EURCHF from 1.2000 to 1.2500
3. E$ oversold condition has pretty much been unwound but not reaching overbought yet
4. Waning downside momentum on the daily chart

Putting them together would leave some room for E$ to push higher.
However, that being said, I must warn that the intermediate target remains at 1.2700/2800.
Therefore, amid these uncertainties, if I am compelled to give a trade recommendation, I would forego the long side trade (unless I am seated right infront of my screen the whole time) but to maintain sell rally at the major resistance levels at 1.3200/30 (1.3250/60 news induced).

All the best!

Wednesday, 11 April 2012

Calm before storm.... Day 2

Good morning, Wednesday!!!

Though E$ was stucked in a relatively tight range, it offered great 2 way trading opportunities yesterday.

The past 24hrs price actions continue to suggest that E$ is not ready to break on the downside yet and we may see another day of consolidation with an upside bias. I believe buy stops could have built up around the 1.3150/60 levels and this could trigger a squeeze towards 1.3190/220 before lower again. This view is reinforced by the waning downside momentum in both USDJPY and AUDUSD.

However, on the flipside, I do have some conflicting technical signals. In view of that, I would prefer to be more conservative.

So for today, 1.3000/10 to hold and 1.3190/220 to cap. Strategy: Sell rally
All the best!

Tuesday, 10 April 2012

Calm before storm.... Day 1

Good morning, friends!

Despite the fact that most major FX markets were closed yesterday, E$ unfolded almost exactly as forecast ie. retested the low and printed 1.3033 before rallying to touch 1.3133 high.

For today, I expect further consolidation with choppy price action but still maintaining an upside bias. If you are hoping for a few hundred pips range to trade today, I suggest you go play 36 holes. Range will be tight and is not going to be very exciting and I will just trade from the defined boundaries.

1.3055/65 to hold and 1.3140/50 to cap (1.3200/20 news induced).

All the best!

Monday, 9 April 2012

Easter Monday!

Happy Easter, friends!!!

Woke up in time to watch the last 2 flights playing from hole 15 till eventual 76th US Masters champion Bubba Watson beating Louis in the play-off!! It was such a pity that Phil Mickelson hit a triple bogey Par 3 in the front 9. The 2 widely expected winners ended in a tie..... Tiger Woods and Rory McIlroy 5 over. I may not be able to chart Tiger's game but with 4 days of the worst swings on the Augusta course and ended only with +5, the rest of the field will pray hard he doesn't get his rhythm back.

Ok, enough of golf.... back to the market. Liquidity should continue to be sub-optimal for today. Target for E$ remains at 1.28/2700 but for now, we should see some consolidation with risk/reward favouring buying dips for now.

Downside momentum has waned and suggest counter directional correction for the next 24 hours but first with a potential retest of last week's low at 1.3035.

1.3000/10 to hold (1.2950/60 news induced) and 1.3120/30 to cap.

Try not to be overly aggressive on the long side until more signals to support a stronger short squeeze.
E$ Head and Shoulder Formation
All the best!

Friday, 6 April 2012

Good Friday!

Happy Good Friday, friends!

E$'s consolidation ended faster than I expected yesterday and quickly fell to test the neckline support (see chart). Ability to hold this support for more than 6 hours, reinforced by bullish divergence and waning downside momentum, have increased the probability of a rebound in E$ today.

Couple of things to note, market is trading on very poor liquidity and we have the US employment numbers on a full moon day. So therefore expect choppy price action.

Taking all things into consideration, risk/reward favours buy on dips. Just manage your own risk knowing that the bigger trend is pointing down with 1.27/2800 target in mind. (6/10)

1.2990/3000 to hold (1.2950/60 news induced) and 1.3140/50 to cap (1.3200/10 news induced)
E$ Daily Chart
All the best and have a great weekend!

Thursday, 5 April 2012

Round 2: Hibernation over....

Good morning, folks!!

Another dramatic day for E$ as it lost close to 300pips in 3 days amid sub-optimal liquidity condition.

A couple of observations and prognosis I want to share:
1.  E$'s inability to penetrate and close above 1.3390/420 for the month and quarter has indeed weakened the technical picture and E$ bulls have to be careful. In the past 48hrs, a couple of important levels were taken out without any signs of a rebound has strengthened this view. In the chart below, E$ has formed, in simplistic representation, a head and shoulder formation which suggest that E$ should be targeting the neckline close to the previous low of 1.3003 and subsequently 1.27/2800. This is viewed as a correction of the rally from 1.2623 to 1.3485 and this wave should be impulsive.

2.  USDJPY is looking vulnerable and I will not discount the possibility of a corrective plunge back towards Y76/77.  This will weigh on the xxxJPY which goes inline with Pt.1. In other words, the probability of a serious spike in risk aversion has risen relatively higher. If it ever materializes, it should happen within Q2.

So what's in store for us in E$ today? Short term momentum has turned up and coupled with oversold condition should trigger consolidation with upside bias. That being said, longer term momentum is still pointing down which remind us to be less aggressive on the long side scalp. 1.3100/10 to hold (1.3050 news induced) and 1.3210/20 to cap (1.3240/50 news induced). Asian hours will be boring, European/NY will provide relatively more excitement amid deeper liquidity.

By the way, I have forgotten to inform all that this is a full moon week. Full moon falls on Friday, coinciding with US employment numbers but of course +/- 2 days, we are already in the zone!
E$ Daily Chart
All the best!

Wednesday, 4 April 2012

Oops, I did it again.... said Fed

Good morning, Wednesday!!

E$ tumbled on Fed's minutes and QE3 was the culprit again..... likewise, I don't know about you, I am quite tired of this lame excuse to move the market.

Based on the weak close in E$, we should expect lots of selling momentum to follow through with the bears banging on these 2 supporting fundamentals ie. the Fed's minutes and Spain's woes.  However, if the support at 1.3200/10 holds, a short squeeze can be expected today albeit after hours of bull/bear struggle around the 1.3210 to 1.3250 band. 

For today, 1.3200/10 remains crucial, failing to hold will leave E$ vulnerable to 1.3150 before bounce. On the upside, many layers of minor resistance up to 1.3250 for E$ to contend with and stronger resistance is at 1.3280/90. A close back above 1.3300 today will be a bullish signal for 1.3380/90 to be retested.

Market liquidity is sub-optimal today and market move can be choppy as a result. Stay nimble!

E$ 2-Hourly Chart
All the best!

Update1: Would strengthen bullish picture if E$ can hold above 1.3235/40 for the next 3 hours.

Update2: E$ bulls, don't be too anxious to jump in first. Momentum is still pointing down and there is no signs of reversal just yet. From the past 24 hours price action, E$ does look heavy and has increased the probability of retesting previous low 1.3003 (head and shoulders neckline at 1.3010/20. E$ needs to close above 1.3300 to invalidate the bearish technical picture. No positions for now, awaiting stronger signals either way before trade.

Tuesday, 3 April 2012


Good morning folks!

E$ was rejected once again at 1.3380/90 yesterday and price action suggest that we should be range trapped between that resistance to 1.3250/70 for now. Being a technical trader, I can imagine stop loss orders being build up on either side just outside the range in the coming days before the breakout, potentially Thursday or Friday. 

A couple of observations:
1.  E$ once again closed 6 consecutive days above 1.3300 yesterday (closed at 1.3320) - underlying Bullish signal
2.  Based on the close at 1.3320 yesterday, it just barely fulfilled a bearish piercing pattern against Friday's price range - Daily Bearish signal

Confused?... in a nutshell, market is telling us that underlying strength in E$ is firm but for today, we probably see downside bias.

At this moment, I am mentally prepared that once the breakout comes, it may break on the downside first to flush the sell stops all the way to probably 1.3200 before turning back up to break 1.3390/420 where loads of buy stops are building up now.

For today, CNY Non-Manufacturing PMI at 9:00am and RBA rate decision at 12:30pm should inject some life (but don't hold your breath). Chinese is still out till Thursday. Expect tighter range 1.3360/70 to 1.3280/90 (1.3240/50 news induced). (5.5/10)
All the best!

Monday, 2 April 2012

New quarter!!

Good morning Monday!

This will be a shortened week as most markets will be closed for Good Friday. However, US Change in NFP will be announced at 8.30pm. So make hay while the sun shines!

E$'s inability to penetrate the 1.3390/420 band on its third attempt will encourage profit-taking and this will weigh on the currency. Price action and momentum both also suggest a near term top with a potential correction lower. 

I do not expect at this moment a major reversal from here despite a triple or some would want to think its quadruple top on the 2-hourly chart. However, a consolidation back to sub 1.3300 is highly probable.

So for today, 1.3380/90 to cap (1.3430/40 news induced) and 1.3240/50 to hold. Sell rally strategy. (7/10)
E$ 2-Hourly Chart
No frills Monday, all the best!