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.