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 |
No comments:
Post a Comment