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.
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