Tuesday, 31 July 2012

Month End + Full Moon = ?

Good Tuesday, folks!

Quite clearly, market has decided to stay relatively sidelined instead of showing a more directional play until probably the final hours of the month end. The rally from the low of 1.20421 to 1.23899 has completed a 5 wave count and it seems apparent that we are into the correction of that rally where a retracement of 61.8% would bring us back to 1.2175. Just to recap on what I mentioned yesterday that on a weekly basis, last week's candlestick was a bullish engulfing pattern. However, the daily bar yesterday was a bearish engulfing pattern, which suggest that we should see spillover selling momentum today. But we should see a counter-directional 'B' wave higher before E$ goes lower again to complete the correction. In short, expect to see higher E$ first before lower again.

Let's see how the stop loss orders are stacked up as of now: 1.2305, 1.2225/20 and 1.2180/70.

For today, 1.2320/30 to cap on first test (1.2360/70 news induced) and 1.2175/65 to hold on first test (1.2100/080 news induced). I have widened the boundary to accomodate potential irregular moves.

Bear in mind that today is the month end and liquidity is very likely to be sub-optimal. Stay nimble as market can get whippy and volatile.
All the best!

Monday, 30 July 2012

Coincidence or what?

Goood Monday morning folks! Today marks my 100th blog post and I hope to maintain this discipline and consistency for as along as I realistically can. Thank you for your support!

Last Friday, Merkel and Hollande joined in Super Mario's effort to inject confidence in the market in their bid to defend the Euro. That propelled the E$ to the high of 1.23898 before it slammed back to where it started the rally at 1.2280 before closing at 1.2321 for the week. On Sunday, Italy's Monti and Merkel once again voiced their support but that only managed a small pop during the NZ open. Clearly, this novelty is at the stage of diminishing returns as in all instances, they stopped short of any details. But one thing is for sure, they have raised the expectations that they are able to pull something out of Felix the Cat's magic bag to save Eurozone.... for good or kicking the can down the autobahn?

This week will be interesting..... Call it coincidence but it happens all the time with market moving announcements in a full moon week. Go check out the weekly calendar for details. Full moon falls on Thursday and +/- 2 days will cover from Tuesday to last business day of the week.

CFTC speculative accounts trimmed their net short euro short to -155,066 from -167,249 following last week's short squeeze.

Technically, shorter term momentum is suggesting consolidation as it unwinds the o/b condition. E$ does look like a retracement is due after 3 days' (Nowotny/Mario/Merkel & Hollande) of rally. However, one has to take note of the weekly bullish engulfing pattern which has increased the probability of further gains in E$.
But for today, risk/reward favours fading into rallies. 1.2370/90 to cap (1.2420/40 news induced) and 1.2200/20 to hold, both on first test.
E$ 4-Hourly chart
All the best and have a great week ahead. 
Update for tomorrow will be delayed as I have an early morning tee-off for 18.

Friday, 27 July 2012

One day is all it takes....

TGIF folks!!!

Mario came to the rescue of E$!! Is this really a sign of Eurozone's resolve or desperation?... since market was caught short E$, it didn't matter. The explosive move took us to the high of 1.2329 clearing buy stops and offers like a hot knife through butter. Admittedly, this move took me by surprise but I am glad the rally started from 1.213ish and it gave me ample notice to re-think my strategy (bullish engulfing pattern came back to mind!). All that being said, I maintained fading into the rally as bearish divergence emerges on the 5mins chart but I scaled in in 4 portions which in way saved my day. I would have joined the camp of bears and called yesterday's move a bloodbath :) Heard in the street that some chartists are projecting E$ to return to 1.2500 and 1.3000 now. There are signs of bullish divergence in the EURxxxs' and momentum is turning up which indicates a near term bottom might have been formed. However, one has to be careful not to be too quick to jump to the conclusion that a reversal in EURxxx will also be a reversal in E$. Reversal in EURxxx indicates potential risk off and may usher in USD strength.

On the stop loss order side, I must say it was useful to know that there was a batch of buy stops around 1.2320/30 and in situation like yesterday, the stops seeking bulls will drool for it.

Technically, intraday indicators are in o/b levels but the overnight consolidation is starting to unwind it from the extreme. Daily indicator also shot to o/b level (though not extreme) as a result of the one day rally. Intraday momentum is still pointing up but sideways consolidation is expected into Ldn/NY session. Daily momentum is starting to point to neutral but inconclusive as of now. Weekly momentum continues to be pointing firmly lower. For today, I shall trade by my defined range. 1.2180/200 to hold on first test, stronger support at 1.2120/30 and 1.2360/70 to cap, stronger at 1.2380/400. No intention of holding any positions over the weekend.

E$ 4 hourly chart
All the best, stay nimble and have a great weekend! Will be off for my 18 holes again and back for Ldn.

Thursday, 26 July 2012

A breather before...... ?

Good Thursday morning, folks!!

Can you actually beat that.... Nowotny's comment can actually trigger a 100+ pips rally in E$? Great, now you are wondering who Nowotny is!!!  Clearly, it was a well disguised short squeeze to trigger the main bulk of the stops above 1.2140 and close the gap at 1.2160 (Vicious cycle... , 25 Jul).
My order at 1.2178 was a touch too high but glad I was seated infront of my screen and still managed to go short at decent level.

Stop loss orders from yesterday revealed that a good amount of the buy stops were flushed by the move where it touched a high of 1.21703, the remaining large ones were residing at 1.2040 and 1.2010/00.

Technically, E$ closed with a bullish engulfing pattern yesterday and it is a bullish reversal signal. This should give the E$ bulls a sense of reprieve. However, after studying all other available factors, I have given this signal a discount for now but will still be kept at the back of my mind. Shorter term momentum is pointing to consolidation with slight upside bias. As we are nearing the top end of the bearish channel where the resistance stands at 1.2180/90 for today, it will be interesting to see how the E$ will react. I remain E$ bearish on a weekly basis and would still prefer to be on the short side from appropriate levels.
For today, 1.2180/90 to cap, stronger resistance at 1.2210/20 and 1.2090/80 to hold, stronger support at 1.2020/40.
All the best!!

Wednesday, 25 July 2012

Vicious cycle....

Good morning, folks.... its mid-week already!!

E$ continue to slide as dark clouds gather over the EU continent. Rumor that Moody's will soon be downgrading Spain's rating to junk status fueled the move down to 1.20422 low despite chatters of good bids. This morning, Moody's downgraded outlook on the provisional Aaa long-term rating of EFSF to negative from stable. This vicious cycle will not be ending anytime soon and made worse by the fact that the global economies are also slowing (see Chart 1, thanks to Kelly Evans! ;))
GLI = Global Leading Indicator
A few batches of sell stops at 1.2090, 1.2070 and 1.2045 were flushed with another large one at 1.2000 still intact.... for now. Buy stops are heard lurking around 1.2140/50.

Technically, shorter term momentum are turning to consolidation but long term is still pointing firmly lower. Mild bullish divergence emerging but price action did not suggest 5th wave completion. In fact, a step fashion drop is more sustainable than sharp plunges. Overall bearish trend is further affirmed and one should look to sell on rally. Buy side intraday scalping must definitely have stop loss order in place, not that you need not for short side.
For today, 1.2090/100 to cap (1.2170/80 news induced) and 1.2000/20 first support with stronger one at 1.1970/80.
E$ Bearish channel
All the best... I'll be off for my 18 holes and back to watch Ldn market.

Tuesday, 24 July 2012

Spain... the tipping point?

Good morning, friends!!

Monday remained a range bound day despite negative news that Moody's has revised the outlooks on the AAA sovereign ratings of Germany, Netherlands and Luxembourg from stable to negative. Having factored in quite abit of negatives and yet price is holding at current levels, makes E$ susceptible to positive news relating this currency.

Based on yesterday's order book, remaining stop loss orders were found at 1.2045/40 and 1.2000 (both large). Hearing buy stops have build just above 1.2150.

Do be aware that EURJPY has reached levels where the Japanese authorities are concerned and the shocker for E$ shorts will be an intervention by BOJ.

Technically, short term momentum has turned to consolidation to up but the longer term is still pointing lower. The past 24hrs consolidation has also unwound its o/s condition but there is still more room to unwind. E$ closed "doji" yesterday which indicates uncertainty (not directional) and can be a precursor to volatility. Downtrend remains very much intact but there is some scope for corrective spikes higher where one should take the opportunity to establish new short positions.
For today, 1.2170/90 to cap on first test and initial support at 1.2080/90, 1.2040/50 and then 1.2000/20.

Update1: Covered my shorts from last week @ 1.2043. Will wait till tom to re-assess. Good nite!!

E$ Daily chart - Bearish channel

All the best!!

Monday, 23 July 2012

Bears won by a knock out!

Good Monday morning, folks!!

Thank God for being mentally prepared for tricky Friday (The final countdown... 20 Jul). Admittedly, I was drawn into believing that E$ might have another go higher before it turns down for 1.2162. However, I was glad I trusted my instinct and flipped to join the bear camp fast enough to recoup my initial loss. All these at the expense of canceling my movie evening (Dark Knight Arises) with my son which I made up on Sunday evening. The movie was great, my son and I enjoyed it. Entertainment for that evening did not end there for me.... once back home, it was F1 followed by the Open Championship. Congratulations to Alonso and Ernie Els and bad news for Sebastien Vettel and Adam Scott.

Ok, back to the market..... Despite the sharp drop last week, latest CFTC speculative accounts only added a marginal increase in E$ shorts to -167,249 from -165,705. 

Technically, the bears are in control now with the critical 1.2162 taken out. Shorter intraday momentum is giving hint of consolidation but longer term ones are still pointing down. Price action is coming to the stage whereby any sharp drop in price will be countered by sharp rebound of a smaller degree. With that in mind, one should hold a structural short followed by the intraday buy/sell to trade.

For today, 1.2150/60 to cap (1.2210/20 news induced) and first support 1.2070/80 followed by 1.2020/50. In focus now is the Jun 2010 low of 1.1875.

E$ Daily chart - Bearish channel

All the best have a great week ahead!!

Friday, 20 July 2012

The final countdown.....


Last night, Asian sovereigns, mideast and Dutch name (rumoured to be acting for SNB) were sellers of E$ at 1.2300 along with the slide in EURxxxs. That was the impulsive wave I foresaw and mentioned in "Bears took one day too many (19Jul Thu)". Sell stops were flushed as it dropped to the low of 1.2229 before market rebounded and stabilise at 1.227ish.

Based on what I have yesterday, the balance of the stop loss orders happened to be buy stops starting from 1.2325/30, 1.2335 and 1.2410. Of course, market would also have to contend with the strong offers at 1.2320/25, 1.2340/50 and 1.2400/05.

Technically, intraday indicators have turned neutral and price band are also tapering. However, more bullish MA crossover is happening as consolidation extends itself with higher lows and higher highs. Taking everything into consideration, there seem to be a slight skew towards the upside but it can be tricky, so stay nimble. Though I may have joined the bull camp for now, I am still a mini bull within a bear fan, until such time when the longer term momentum indicates otherwise. Also to note that there is a slight bullish divergence on the weekly chart but still premature to confirm the signal as we probably need another 2 weeks worth of data before anything more substantial. This near term bullish view will be invalidated once 1.2180/90 breaks.

For today, still prefer to buy on dip. 1.2240/50 to hold (1.2210/20 news induced) and to manage a tiered profit take at 1.2360 and subsequently 1.2430 and 1.2470 which may not happen today.
E$ Daily chart
All the best and have a great weekend!

Thursday, 19 July 2012

Bears took one day too many.....

Good morning folks!!

I was not around to monitor the price action of E$ last night as I was out with my recent Cambodia Mission trip's Gang of 12. We had a fabulous dinner which included the famous Singapore chilli crab!!! Yums!! For those who are interested, its Crab Party @ 100 Yio Chu Kang Road (opposite Serangoon Stadium).

No update on the stop orders yet but I last gathered that stops were building up just above 1.2310. Calendar for today and tomorrow is very light on data.

True enough, E$ consolidated within Tuesday's range and its clear that we are into the A-B-C-D-?.
I believe E wave should be formed today and we should see a potential breakout. I have been mentioning about being bearish on a weekly basis but I have to review and be reminded again in what I have observed and penned out in "Bears trampled by bullocks (17 Jul Tue)".
Intraday indicators are in o/b condition and upside should be limited for now until it has corrected lower first (Wave E and normally impulsive). Daily momentum is starting to turn up following the past few days' price action and this has increased the probability of a near term bottom formed at 1.2162 and the possibility of targeting 1.24/500 is getting higher.

There are still mixed signals but I see a skew towards the upside and would prefer to buy dips for today. 1.2230/50 to hold (1.2180/200 news induced) and 1.2380/400 to cap (1.2440/50 next strong resistance).

E$ Daily chart

All the best!!

Wednesday, 18 July 2012

Long shadows.......

Good morning folks...

There seemed to be a technical issue with my trading platform and I am not able to assess my charts.
Will update my blog as soon as it is up.
Thanks for your patience.

I'm back!!  E$ got hit by a double whammy last night as both news that there is LHS interest into London fixing and Fed Chairman's unwillingness to be explicit with his intention on QE3 hastened the selling momentum to touch low of 1.2189 before a commendable recovery towards 1.2300 in the later part of the NY session.

Sell stops were pretty much flushed and the latest information revealed only buy stops from 1.2310-30 for now.

Technically, intraday momentum have all turned to range consolidation. Longer term intraday o/b condition has been unwound somewhat. It seemed like market is either comfortable sticking around here with indicators moving towards neutral or there is something big about to happen that we do not know. As I continue to search for clues and signals, I noticed on the daily chart following the bullish engulfing candle-stick that the E$ closed "doji" with the long shadow for 2 consecutive days. Together with other indicators, it seemed like we have a slight skew towards lower E$, following a potential spike higher.

I have to admit that its going to be a low percentage call (55/45) and I'll stay with the sell rally strategy.
1.2330/50 to cap (1.2390/400 news induced) and 1.2180/300 to hold for today with a subsequent break of 1.2162.

E$ Daily chart

All the best!!

Tuesday, 17 July 2012

Bears trampled by bullocks....

Good Tuesday morning friends!!

Great start to a new week?

Market spent a big part of the day testing the downside but last Friday's low of 1.2162 held its ground and the E$ timed its start of the rebound with the release of the dismal US retail sales numbers. As the rally picked up steam, stops above 1.2220, 1.2240 and 1.2280-1.2310 were triggered, flushing out the weak shorts. The supposedly large offers at 1.2300 seemed well absorbed.

Stop loss orders can now be found at 1.2275 and above 1.2320. Market focus is on Fed Chairman Bernanke's testimony to the Senate at 2200hr (Sin/HK). With the recent spate of weak US data, market is factoring in some possibility of Fed reconsidering QE3 in whichever form or new terminology to disguise. This should have E$ probing the upside limit going into the event.

Technically, intraday indicators are all overbought (o/b) though not at extreme condition yet. Longer term indicators are starting to unwind from o/s levels. Shorter intraday momentum indicators are pointing up but longer ones are pointing to potential consolidation with 1.2340-60 becoming tougher resistance.
While I am bearish the E$ based on the weekly chart, I may have to scale back some of that expectation with these new developments:

  • The price action following the bullish divergent signal 
  • Break of trend line (see chart)

Question here is..... how deep can this correction get? On the extreme, I see around 1.2480 which also coincides with the 61.8% retracement of the 1.2693-1.2162 range.

For today, I must admit that with a major risk event tonight, this will not be a high percentage call (55/45). Having considered all the factors, risk/reward favours a sell rally strategy. 1.2340/60 to cap on first test (1.2390/400 news induced) and 1.2230/50 to hold.

E$ Fibonacci Ratio

All the best!!

Monday, 16 July 2012

Counter attack of the Spartans.....

Good Monday morning folks!!

What happens when CNBC interviews 10 market people and all said they see lower E$? This together with the mild bullish divergence signal actually had me on high alert for any sharp reversal. The move came on the back of buying from the Austrian and US banks on Friday night and momentum picked up as stops were triggered on its way up. So much for the "drive-by" as quoted by the traders :)

CFTC speculative accounts added to their net E$ short position of -165,705 (last week) compared to -146,177 as of 10 July.

The chunky stop loss order is noted to be lurking just above 1.2300 for now.

Technically, we have a mixed bag of signals. Shorter term momentum has turned up naturally as a result of the sharp price move and shorter term indicators have all moved off its o/s levels. However, for the longer term, momentum is still pointing down and E$ is still in o/s condition. The clearest signal by far is the daily candle-stick formation where it showed a bullish engulfing pattern. The weekly bar was a "doji", not a directional pattern but it indicates market uncertainty as the open and close were also at the same level.

I believe market is caught short and the short squeeze is not over yet. For today, buying dip is the preferred strategy. 1.2200/20 to hold (1.2170/80 news induced) and first stronger resistance at 1.2325/35 (1.2350/60 news induced).
E$ Daily chart
All the best and have a great week ahead!

Friday, 13 July 2012

Spartans not giving up yet.....


E$ finally broke through 1.2200 and the option and stop loss orders were tripped on its way down to 1.2166 during the Europe/US session. As market nears first support at 1.2150 (read Battle of Thermopylae 12 Jul), it hastened some profit taking. The consolidation is still unwinding the o/s condition and price is holding steady despite Moody's decision to downgrade Italy.

Last heard was Asian sovereign name bidding at 1.2150 and stop loss orders at 1.2145, 1.2250/60, 1.2275, 1.2300, 1.2320 and 1.2340. An update later today should see most stops at the higher level moved to 1.22ish.

Technically, short term indicators have moved off its o/s levels but longer term has not really changed. But having said that, price can continue to fall further. Short term momentum has turned up already since last night but longer term is still pointing lower. Price action continue to look consolidative and is still hanging heavy. There is sign of slight bullish divergence in the longer term momentum though price action does not suggest a completion of 4-5 wave. However, all available signals cannot be ignored and still warrant special attention. Taking everything into consideration, bias should continue to be down and one should look to sell into rallies. The bullish divergence has increased the probability of a quick short squeeze before falling back and one has to be nimble to react.

Support band 1.2150/80 to hold on first test and subsequently 1.2120 for today. Topside 1.2240/50 to cap. A break and close above 1.2335 would reverse short term bearish technical picture.
E$ within bearish channel
All the best and have a great weekend!! Its will either be The Dark Knight Rises or Ice Age 4 friday evening out with my boys....

Update1: Be careful of further short squeeze as market is potentially targeting the stop loss orders above the 1.23 level. However, I do not see this as a trend changer as longer term momentum is still pointing firmly lower for now. Will assess the situation again on Monday.

Thursday, 12 July 2012

Battle of Thermopylae.....

Good morning folks!!

E$ held off sellers twice and fought back to defend the 1.2200/30 level just like how the 300+ brave Spartans stood its last stand against the vast Persian army in the Battle of Thermopylae. Bruised and tired, it is drawing its line at 1.223ish for now......

So much for story telling but I just want to give everyone a picture of what I think is the situation with E$.

Yesterday, E$ attempted to spike higher but was capped around 1.229ish by Dutch and semi-official sales. It got further hammered as words went around that there will be E$ sales during the London fixing. Of course the final nail was when Fed disappointed the E$ bulls when it failed to hint of QE3 in it FOMC minutes.

Stop loss orders from yesterday's source revealed that they around 1.2200, 1.2310, 1.2330/35 and 1.2365.

Technically, price action suggest that E$ bulls are exhausted and price pattern hangs heavy. Though the whole range of indicator is showing close to o/s condition but it still has room for a protracted fall in price. Momentum is mixed with shorter term turning to consolidation to up but longer term continues to point firmly down.

Given the above, risk/reward favours sell rally for today. But I will be mentally prepared for a sharp spike briefly above 1.23ish before turning lower again. As this spike may not come, I therefore recommend scaling in your shorts. First support stands at 1.2150/60 and stronger at 1.2030/40. Nearest previous low is at 1.1875 (7 Jun 2010). Topside, 1.2270/80 to cap (1.2330/40 news induced).

E$ Daily chart - Bearish channel
All the best!!

Wednesday, 11 July 2012

Before it gets lower.....

Good Wednesday morning folks!

Hope all had a great field day.

Yesterday's session lacked direction and was basically stop loss seeking. Market first took out the stubborn batch at 1.2325-30 before it gunned for the lot below 1.2280 and 1.2250. The selling stalled when bids emerged ahead of some hear say optionality at 1.2230.

I have no updates yet for today on the stop loss levels but based on what I've got yesterday were those residing around 1.2200, 1.2220 and 1.2365. Reckon would have some build up above 1.2335/40 today.

Sentiment from overnight is still bearish the E$ and most were too keen to stay short at current levels. Though I am bearish on a weekly basis, I am not very convinced that E$ is ready to break lower without first revisiting the 1.2360/70 level.

A quick scan across the EURxxxs show that the crosses look bottomish and is due for a corrective rebound. This is E$ supportive.

On the technical front, shorter term indicator has slipped into o/s condition though not extreme and momentum has turned to consolidation to up. On the flip side, longer term momentum is still pointing firmly down and yesterday's weak close on a daily basis is also a signal one cannot ignore.

Having weighed all available signals, I maintain my strategy of scalping long and positioning for short. For today, 1.2200/30 to hold on first test (1.2170/80 news induced) and 1.2360/70 to cap.

E$ Fibonacci levels
All the best!

Tuesday, 10 July 2012

Dead cat bounce?

Good morning folks!

Summit after summit, bail-out after bail-out..... E$ is at 1.2310. So unwanted that even the GBP$ is performing better on relative basis. Just a side-track..... wonder how much money can be saved from the expenses on these meetings eg. the business class air tickets, hotel suites, limousine service, cost of security service, etc..... should use more video-conference!
Meeting continues today and market should be more sensitive to good news as market is caught slightly short on its way down.

Nothing interesting on the stop loss front with only one at 1.2200 for now.

Technically, the past 24hrs' consolidation has unwound its o/s condition into neutral. Short/medium term momentum has turned up and longer term is still at consolidation to down. With the emergence of bullish divergence and its price action characteristic, it does look like we could have formed a temporary base and ready to correct last week's drop. The correction level based on Fibonacci ratio is shown in the chart below.
I remain bearish on the weekly basis for 1.20ish and would prefer to await for sell signal for positioning (when closer to 1.24) but for now would scalp on the long side.

For today, 1.2250/60 to hold on first test (1.2200/20 news induced) and 1.2350/60 to cap (1.2440/50 news induced).
E$ 4-hourly chart
All the best!

Monday, 9 July 2012

Greeted by bears......

Good Monday morning, friends!!

What happened during my absence? The anticipated short squeeze came fast and furious on the last day of June clearing most of the buy stops on it way up to 1.2693 from the low of 1.2407. In hindsight, that move was when market retested the break in the long term trend line (see chart) where it failed and was rejected. Celebration for the bulls was short-lived as E$ made an about turn the very next trading day. It erased all gains and broke an important low at 1.2288 before finding some support at 1.2234 this morning before it consolidates ahead of the ECOFIN meeting tomorrow.

Stop loss orders seem sparse at 1.2200 and 1.2505 only.

Technically, short term momentum has turned to consolidation to up while the longer term is still firmly pointing down. Shorter term indicator is showing mild bullish divergence which has increased the probability of a near term bottom. Bears should start looking to scale out their shorts and look for sell opportunities at higher levels again.
Expect today's low to be challenged again but I don't expect follow through for now but instead consolidation with an upside bias at least for the next couple of days. Main trend for now is bearish and on the week, I will be looking to sell the rally.

Hope this is sufficient for now while I try to get back into the market rhythm and provide levels when I am ready.

E$ Monthly chart
All the best and have a great week ahead!!