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).
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| E$ Daily chart |
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