E$ hit the low of 1.2642 last Friday and rebounded strongly to close the week at 1.2777.
US CFTC data reveals that under the speculative accounts, net E$ shorts have build to a record position of -173,869 vs last week's -143,984.
The relatively strong counter directional move last Friday has turned short term momentum bullish and longer term momentum has also turned up which has increased the probability E$ has already formed a temporary bottom. One should now be mentally prepared for further short squeeze to flush out the weak shorts who have established their positions in the last 2 week on the back of those overwhelmingly negative Eurozone news. I will not be surprised that the gap at 1.3080 will now be the centre of attraction!
For today, 1.2820/30 should cap this morning rally for a corrective move lower through Europe to NY session. Over the next 48 to 54hrs, we may see range consolidation with potential probe back to 1.2670/80 first where I will be reviewing if its good to establish long positions for a deeper pullback.
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