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).
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| E$ Daily chart - Bearish channel |
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