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!