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$. Reversal in EURxxx indicates potential risk off and may usher in USD strength.
On the stop loss order side, I must say it was useful to know that there was a batch of buy stops around 1.2320/30 and in situation like yesterday, the stops seeking bulls will drool for it.
Technically, intraday indicators are in o/b levels but the overnight consolidation is starting to unwind it from the extreme. Daily indicator also shot to o/b level (though not extreme) as a result of the one day rally. Intraday momentum is still pointing up but sideways consolidation is expected into Ldn/NY session. Daily momentum is starting to point to neutral but inconclusive as of now. Weekly momentum continues to be pointing firmly lower. For today, I shall trade by my defined range. 1.2180/200 to hold on first test, stronger support at 1.2120/30 and 1.2360/70 to cap, stronger at 1.2380/400. No intention of holding any positions over the weekend.
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| E$ 4 hourly chart |
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