Friday, 29 June 2012

E$ to slip into USD mode.....

TGIF folks!!

In less than 24 hours (Sin), market will close the month of Jun, Q2 and H1 of 2012. Where we close can tell a story for the next half of the year, so it can be crucial.

Fundamentals..... EU Summit started with a managed expectation that nothing substantial will come out of this meeting and that sent the E$ reeling to the low of 1.2407.
What can be worse now? Clearly E$ has built in quite abit of negatives and still standing at 1.243ish. It may take another blow down to 1.238ish but anything else is surprise on the upside. Latest in the market was that Merkel is starting to warm up to the idea of the the Eurobond.... could this be the trigger? Let's watch.....

On the stop loss orders, this is not the latest information but here are where they reside from yesterday's session: 1.2550, 1.2400, 1.2390 and 1.2350.

Technically.... its really been a mixed bag based on just E$ alone and I need to seek help by looking at the EURxxx and precious metals once again. On E$ itself, momentum on the short to longer term is mixed but with a slight skew towards consolidation to up. Longer term indicator showing o/s but not at extreme yet and signs of mild bullish divergence. EURxxx however are consistent in that there is stronger bullish divergence signal across the main crosses. With that, the probability of E$ nearing a short term bottom is higher. A close today above the price line (see chart) will be E$ supportive for the days ahead. However, important to note that a rally in EURxxx is a risk off bet and more likely commodity related will now be the victim of bashing or it has already started..... (in a risk off environment, E$ will then slip into the USD mode).

Having weighed all the knowns, I maintain my buy dip strategy... 1.2380/400 to hold (1.2340/50 news induced) and 1.2550 to cap for now.
E$ Daily chart
All the best and my next update will be 8 Jul 2012.

Thursday, 28 June 2012

Opposite direction....

Good day friends!

The much anticipated event of the week is finally here and what is there is store for us?
Overnight, low was 1.2445 and market is in the process of short covering ahead of the EU Summit. High so far had been 1.2524.

The latest stop loss update revealed the following: 1.2600, 1.2550, 1.2425 and 1.2400.

On the technical front, the longer term momentum have turned to consolidation to up. However, shorter term indicator is at o/b territory though not extreme.
Basing on the above, I believe market should start to get suck back into the range of 1.2450 to 1.2530 for now. But what is more significant is the baseline is now risen from 1.2340/50 to 1.2390/400 and the  probability of the retesting the recent low of 1.2288 is lower. The higher band of 1.2560/600 to 1.2650.

Scalpers, be warned that for today and tomorrow, market will be exposed to more random news impacting the price action which will overwhelm technicals. I prefer to position my entry nearer the boundaries for a better risk/reward payout. In the same vein, it is favouring a buy dips strategy for today.

Just remember, whatever you do, always have your stop in place..... even before you leave your desk for a toilet break!
E$ Daily chart
All the best!

Wednesday, 27 June 2012

Bull within bear.....

Good morning folks!!

Had a great field day?

Fundamentals.... Merkel fell victim to intentional misinterpretation of her comment as market searched for any excuse to gain momentum to sell the E$ for stops. It seems like E$ is happy to head into the EU Summit this Thursday with the mindset that nothing substantial will come out of this meeting.... that is doubting the EU leaders' resolve from past experience? But this will put E$ in very vulnerable position to sharp short squeezes if any positive news were to come out of it.....

For the past 2 days, stop loss orders were skewed to mainly sell stops only. However, information received this morning revealed a relatively more balanced picture.
They are lurking at 1.2600, 1.2550, 1.2442/35/30, 1.2425 and 1.2410.

Technically, it has become more of a mixed bag of information. Shorter term momentum has turned to consolidation to up, whereas the longer term is still pointing lower. Longer term indicators is showing E$ in o/s territory but not extreme at all. Shorter term tech is showing mild bullish divergence.
Lastly, E$ has traded to familiar territory (see chart). I have drawn a line to show that the recent days, market has somehow muscle its way to consistently close E$ above 1.2480 as shown by the shadows of the candlesticks (as circled).

Having analysed the above and also taken into consideration that Friday will mark the last trading day for the month of June, here's my prognosis.....

While I maintain my bearish weekly view, I am mentally prepared for a potential short squeeze ahead of the EU Summit as some readings from the technical indicators have increased the probability of a mini bull within the bigger bear. On wide, I see 1.2340/50 to 1.2560-600 by Friday. I prefer to sell into rallies for positioning and guerilla scalping on the long side. In other words, if I am long E$, I will be desk bound but if I held a short position at strategic level, I can be found at the driving range :)
For today, 1.2450 to hold (1.2400 news induced) and 1.2550/60 to cap.
E$ Daily chart
All the best!!

Tuesday, 26 June 2012

The pain in Spain.....

Good morning friends!!


* Moody's downgraded 28 Spanish banks and 2 issuer ratings by 1 to 4 notches (E$ did not really react!!)

* CFTC net speculators revealed that E$ net short stands at -141,066 (19 Jun), down sharply from -195,187 (12 Jun) and from the record level -214,418 (5 Jun).

* Stop loss orders can be found at 1.2470 and 1.2442-35.

After almost a full day of consolidation, short and longer term o/s condition has been unwound but still not into the o/b zone yet. Looking at the price actions, it appears that we may be in for further consolidation with a slight upside bias to retest the 21 DMA which is at 1.2532 today and possibly further short squeeze into 1.2550/60.

Today will be light on economic data releases and market will mark time for the EU Summit starting on Thursday.

It will be a lower percentage call today but if anything, I will await to sell E$ on rally as I maintain my bearish bias for the week. 

1.2480/70 to hold for now (1.2430/20 stronger support).
E$ Daily chart
All the best!

Monday, 25 June 2012

E$ underperformed expectation....

Hope all had a great weekend and I look forward to another exciting week before I fly away this coming Saturday for a mission trip and will be back on the 6th July.

Meantime, I have taken profit on my long E$ and A$ on Friday night and will stay aside for now since the currencies did not close as firm as I hoped to see. I will be monitoring XAU$ (closed firmer on Friday) and EURAUD for correlation.

E$ Daily chart
Update1: Indeed the weak close last week was the strongest message that the bulls were in trouble. I would have to scale back on my weekly bullishness of the E$, now that it has broken below the daily 21MA. Market has turned its focus to the EU Summit starting this Thursday.

Technically, short and longer term momentum are all pointing down but it has gone into o/s territory for now and we should see sideways consolidation to unwind the oversold condition before further selling kicks in. E$ looks vulnerable and may potentially fall towards 1.2340 quickly and I am even mentally prepared for a retest of recent low of 1.2288 in the days ahead.

It will take E$ to close above 1.2600 to invalidate the bearish view.

Immediate resistance stands at 1.2510/20 and stronger at 1.2550/60. All the best!

Friday, 22 June 2012

Opportunities or bloodbath?

Good morning folks, its Friday!!!

Hope you have monetized last night's move rather than calling it a bloodbath.

Short and sharp for today..... China is out, most of the sell stops were flushed, which leaves us with only buy stops lining from various levels from 1.2600 to above 1.274ish. Liquidity will be sub-optimal during the Asian session. 2 things can happen, moves can be exaggerated and gappy or it can be sleepy. My gut feel is that market will take this opportunity to eat the lower hanging fruits first and will await Ldn/NY session to push higher to close the week firm i.e. between 1.2650 to 1.2700.

In line with yesterday's expectation, 1.2530/40 to hold and 1.2680/700 to cap for now.
E$ Daily chart
All the best and have a great weekend ahead!

Thursday, 21 June 2012

Buy rumor, sell fact?

Good morning friends!

So the market got what they wanted from the FOMC? seems like 1.274ish resistance is a hard nut to crack. The harder it gets, the more stops will accumulate above over time. We shall wait and see for now.

Last night was the second time in recent weeks that I woke up in the middle of the night to discover my order filled and market had rallied, peaked, missed my take profit level and turned back down. This time I bought my E$ at the day's ultimate low of 1.2638 but my t/p was at 1.2768, high was 1.2743 (a cool 100 pips in a matter of minutes!!!). By the time I woke up and logged in, market was trading down to 1.267ish where I covered my position. I was not expecting anything, so that was bonus!

Back to the market..... a few factors are warning me against getting too bullish at current levels:

  • double top at 1.274ish
  • short and longer term momentum are turning down
  • overbought condition
  • mild signs of bearish divergence
  • stops at 1.2550/40 are still there
Despite the above, I am aware that if I went short, I am going against the trend and I must monitor the market very closely. So it will be scalp for short, position for long today.
Its downside bias for E$ today but be careful of sharp rebound. I see 1.2540/30 to hold and 1.2720/30 to cap.

E$ Chart
All the best!

Wednesday, 20 June 2012

"Never say die".....

Good morning folks, its midweek already!!

Don't you love the "never say die" attitude of the E$? :)

It only fell to the low of 1.2569 before it rallied strongly on the back of positive comments from the G20 meeting. It finally ran out of steam after triggering the buy stops above 1.2720 to print 1.2730 high before falling back.

Technically, the piercing pattern from yesterday's price action has increased the probability of further momentum for E$ to test Monday's high of 1.2747 later today where stops are heard to be lurking above (see chart).

US FOMC will be the main event for the day but that will be more than 12hrs from now. In the meantime, E$ should consolidate to form a sturdy base for its next move higher. Short term momentum has turned down but price action has to be monitored closely to check if the longer term momentum continues to point higher through the Ldn/NY session.

For today, I continue to look to buy dips. 1.2620/30 to hold and 1.2790/800 to cap.
E$ Daily chart
All the best!

Tuesday, 19 June 2012

Tuesday blues....

Good morning folks!

I was abit late into the selling yesterday but still managed to walk away with a decent forty over pips during the Ldn/NY session. Not too sure about you but I am happy for an intra-day trade :)

True enough, market gunned for the sell stops but 1.2550/40 remains unscathed for now as low for yesterday was 1.2557. This coincides well with my view for today. See chart below where I have circled last Monday/Tuesday bars for the purpose of comparison. I see some follow through sell momentum from yesterday's weak close and hopefully E$ takes another jab for the 1.2550/40 stops where it should hit the trend line support and then rebound.

Expect price action to be corrective and do not extrapolate the next phase based on the previous, its a different cycle already. EURAUD broke down sharply overnight which implies risk on but that would also suppress E$'s bullishness.

For today, I look to buy the dip. 1.2520/40 to hold and 1.2650/60 to cap.
E$ Daily chart
All the best!

Sunday, 17 June 2012

Election result is out, what next?

Hi folks!

The Greek election result is definitely easier to predict than the US Open played on the infamous Olympic Club course!

No prize for guessing the reaction of the currencies during the NZ opening hours. Question now is..... where is the fear? Do note that the next major risk event is on early Thursday morning where Fed will announce its FOMC decision.

Currently stops are seen on both sides.... 1.2550/40, 1.2590, 1.2650 then 1.2820/30, 1.2850. but judging from the proximity to current spot of 1.2690, the sell stops seem more reachable.

The weekly trend remains bullish but I can't get too bullish today and would take a chance to sell into rallies before E$ tries to establish a foothold before its next rally higher towards 1.28ish and then 1.3000.

1.2750/60 to cap (1.2780/90 stronger resistance) and 1.2630/40 to hold (1.2585/75 stronger support). Be less aggressive on the buy take profit level.
EUR$ Daily chart
All the best and have a great week ahead!

Update: Momentum is pointing down, reckon E$ to get bashed closer to 1.2520/30 before I consider new buying.

Friday, 15 June 2012

Trend is your friend......

TGIF folks!

Trend is our friend.... yes, I was reminded again yesterday. I have mentioned before about trading AUD$ against the trend and I did yesterday. The price action on its way down was corrective and it fell way short of my target of 0.9860/70 and looks set for my upside target of 1.0120. Trailing stop saved the day or it would have been red. Always remember not to give everything back, and worse to lose subsequently when you were already riding on profit..... its a cardinal sin!

Currencies are taking in its stride the event risk this weekend as it pushed higher to take buy stops out overnight. It has come to the stage where downgrades and even if Greece exits the Eurozone, the market will just shrug it off as a E$ positive, considering how much negatives have been factored into the market by the positioning as revealed in the CFTC data.

Will keep it short for today as I hope not to carry any position over the weekend. E$ should still have some more momentum to challenge the week's high of 1.2670 and will keep my initial target near to 1.2800 in mind.

1.2540/50 to hold and 1.2680/90 (1st resistance) and 1.2780/800 (news induced). Guerilla trading style for today but only on the long side.
E$ Hourly
All the best and have a great weekend!

Thursday, 14 June 2012

Is the focus on Greece election?

Good morning folks!

Hope all had a great run in the E$'s rally yesterday. I was expecting the next target around 1.26ish to be achieved today but everything was accelerated in yesterday's move which leaves us with limited headroom for today.

Despite the downgrade of Spain, E$ held its ground. A rebound in EURAUD above 1.2600 indicates near term risk aversion as AUD$ dwindled. I see higher probability of currencies retracing overnight gain as market is turning its focus to the Greece election over the weekend.

I have instead chosen to sell AUD$ on rally as it looks more vulnerable on the chart. It seems like market has been rejecting price above 0.9955/65 region for the past couple of days and pressure is on for AUD$ to consolidate towards 0.9860/70 before it finds a stronger support to propel it higher again for 1.0120 in the weeks ahead.

For today, 0.9955/65 to cap (1.0000/20 news induced) and 0.9860/70 to hold (0.9815/30 news induced).

All the best!

Wednesday, 13 June 2012

I want to break free....

Good morning folks!

Yesterday's price action suggest that E$ was going through a corrective phase searching for a bottom. It briefly touched 1.2442 low which was close to its 61.8% retracement level and rebounded into its defined range. Looking at the chart below, E$ seems supported above 1.2480 (line) and the past 3 days' close suggest E$ has a higher probability of testing yesterday's high of 1.2529.

EURAUD breaking support at 1.2600 provided some form of affirmation as AUD$ recovered and stayed firm through the NY session.

Despite the sell-off in E$ on Monday, it has not breached my technical level to call off my USD bearish view for now.

Market is flirting around the neutral zone and I see further consolidation (within a relatively narrow range) but with an upside bias for today. It may not be a high percentage call but given the controlled environment where tight stop can be placed, I shall attempt to buy the dip.

1.2470/80 to hold (1.2400/380 news induced) and 1.2540/50 to cap.
All the best!

Tuesday, 12 June 2012


Hi folks, was caught up today and not able to update my blog till now.

I attempted to buy the dips yesterday but felt uncomfortable when the momentum continued to point down. Did the right thing by tightening up the stop and eventually walk away with a small bruise. I was complacent not to place more importance when market touched and backed off from 1.2670. That was the retest level of the trend line where E$ broke down from last month (see yesterday's chart). Greece election on this coming Sunday (17 Jun) would dampen any E$ bullishness for now.

Currently, stops can be found at 1.2445/40, 1.2425/20 and 1.2360/50. Did not hear anything on the upside though.

Looking at the price action, it seems like market wants to take the E$ lower to the first support level, 61.8% retracement of 1.2288/1.2670 which stands at 1.2435 and subsequently to 1.2400/380. Admittedly, I have bearish and range bound signals for now which can be quite mixed. I would stand aside and await for further development before committing to a trade idea.

1.2540/50 to cap and 1.2400/380 to hold for today.
All the best!

Monday, 11 June 2012

Baby Spanish steps.....

Good Monday morning , folks!

E$ gapped up on news that EU leaders agreed to extend a loan of up to E100 billion to help Spain recapitalize its banking sector. It closed at ard 1.2516 last Friday and opened at 1.2623 this morning, a cool 100+ pips!!! Though I wished I had held on to my long position from Friday but discipline to avoid over the weekend short term play saw me taking a small profit. No regrets because one fine Monday morning, the market will open against me because of some surprise fundamental news and the stop loss will be uncontrollable.

Last Friday during the NY session, EUR$ refuses to bottom out until it took out the stops below 1.2440. I was watching the price action and clearly market was so adamant. It attempted about 5 rounds until it succeed and then rebounded through the rest of the night into the closing. Currently, stops are lurking around 1.2690, 1.2600, 1.2385/80 (Large) and 1.2360.

As far as the positioning is concerned, latest CFTC speculative accounts reveal that short E$ has build to another record level at -214,418 vs last week's -203,415.

Technically, E$'s ability to open with such a sizeable gap indicates strength and potentially a trending direction. Remember that gap at 1.3080 on its way down? Honestly, I was expecting E$ to be pushed to retest recent low before the recovery but it is not to be.
I maintain that USD has seen an important top for now and market should move back to risk loving mood in the weeks ahead as mentioned in "Bulls continue to charge...." (7 Jun12). E$ may ride on this momentum to push towards 1.2800 this week.

For today, 1.2575/85 to hold and 1.2670/90 to cap for now. Prefer to buy on dips.
Always remember, the trend is your friend.

EUR$ Monthly Chart 
All the best and have a great week ahead!

Friday, 8 June 2012

4 days up, 1 day down.....

TGIF folks!

On the fundamental side...... China's 25bps rate cut coupled with upbeat remarks from Merkel provided the boost for AUD$ and EUR$ to their day's high of 1.0002 and 1.2625 respectively. Then dovish remarks from Bernanke followed by Spain ratings downgrade by Fitch changed the risk sentiment sending them lower.

On the stop loss side, topside 1.2650 escaped being triggered and now leaves a string of downside stops looking very vulnerable. They are 1.2540 (cleared), 1.2440, 1.2385/80 (Large), 1.2360 and 1.2330/20.

Guess it became obvious that profit taking should be the best thing to do after recent sharp gains in the currencies on the expectation of QE3.

On the technical side..... upside momentum has waned and turning down which suggest a correction of recent run up is underway. I will not be surprised to see E$ return near to its weekly opening price of 1.2401 by NY close. In the following week, E$ being the weaker currency against its commodity counterparts, I am mentally prepared for E$ to correct as low to the recent 1.2288 as possible before rebounding again.

EUR$ 1.2600/20 to cap and 1.2450/60 (1st stronger support) to hold (1.2380/2400 news induced).

All the best and have a great weekend.

Thursday, 7 June 2012

Bulls continue to charge.....

Good morning folks!

One positive news after another propelled AUD$ close to parity from the recent low of 0.9582.
The tricky part here is that short term indicators is showing bearish divergence at overbought levels but longer term ones suggest a potential extension. From my experience with this currency pair, when it trends, don't trade the opposite direction but look for good levels to join in.

The bullish momentum in AUD$ should provide support for the EUR$ but one has to watch the EURAUD cross closely too. Always remember that EUR$ is the new USD and it does not always imply that EUR$ will rally the same as the commodity currencies.

Today, we have the Spanish bond auction and Ben Bernanke's testimony to provide some stimulation to the price action. Stop losses in the EUR$ above 1.2620 and 1.2650 will attract lots of attention if Fed Chairman hints of further stimulus.

I remain bearish on the USD and believe market will continue to love risk in the weeks ahead.
All the best!

Wednesday, 6 June 2012

We have the sunshine after the rain......

Howdy folks, hope all had a great time with the market? Guess I brought sunshine back!

In my earlier blog titled "It's my turn, said EUR" (23 Feb 2012), I mentioned of EUR having a multi-week outperformance against most majors. That was the very subtle start of risk aversion where negative carry pair like the EURAUD was moving higher from the low of 1.2133 to top off at 1.3030. However, just a couple of weeks back while I was holidaying in Sydney, signals suggest the move may have ended. (trust me, I did not spend that much to turn the AUD!!)

So what does that imply? In short, we may move back into a risk loving environment in the weeks ahead with AUD starting to stay firmer again. Do note that I have not seen similar reversal signals in the xxxJPY crosses yet, so I will be mentally prepared for another round of JPY strength.

Based on the technicals, the easy money from the USD rally has probably come to its tail end with AUD$ price action showing stronger bullish divergence as compared to EUR$'s milder signal. In my last blog "Uncertainties, uncertainties & more.....", I warned of a sharp sell-off followed by a sharp reversal, all happened during the full moon zone which ended yesterday.

There should be sufficient information here to get anyone out of trouble for now while I recuperate. Therefore, no specific levels for now. Will update if anything.

All the best and have a great week ahead!