Friday, 31 August 2012

Wild, wild West.....

TGIF folks, I will be off for my son's school charity golf event today and hopefully make it back for Bernanke's speech at 10pm (Sin/HK) tonight.

Another day of tight range trading 1.2487-1.2564, where all it was interested in was stop loss orders seeking from down from 1.2520 through 1.2490.

From yesterday's order book, based on the recent range, there isn't any stop loss orders left. This speaks volume as most would have already stayed by the sideline.

Technically, as one would have expected, the intraday indicators are all consistently showing neutral signals and consolidation. Firstly, I have determined that the weekly trend is up (but not necessarily be this week though) but in order for a healthy move higher, a correction lower to form a base to spring board the next wave would be ideal. Taking the full moon effect into consideration, what would have been the most brutal move in order to weed out everyone before it moves higher? I have a couple of scenario here:
1. An initial rally to break recent high of 1.2589 and retest upper trend line around 1.2640/50 before falling back to retest lower trend line at 1.2410/20 and then close around the lower band.
2. Fall straight for lower trend line and then rally to break 1.2589 for upper trend line.

Liquidity will be sub-optimal, its full moon and month end. Therefore, I was just thinking of the extreme as you would have noticed the ranges I mentioned would probably be more than a single trading day's. My advise is not to be caught dead in the mid-range but position on both extremes, though I would have preferred to buy dips if I were to be positioning for a more structural play. By the way, there is another stronger support near the lower trend line at 1.2360/70.
E$ 8hourly chart - Bullish channel
All the best and my next update will be on 6th Sep, Thursday. Its school holiday and time to take a short break and spend quality time with my boys!

Thursday, 30 August 2012

Season change....

Good morning folks!!

In extension to 'Bull in disguise.. (29 Aug12), as far the euro is concerned, tis the season to be jolly as market shifts its attention to other factors which are directly and indirectly offering some form of support. No prize for guessing, US Fed's potential QE3 has definitely stolen the limelight for now. Indirectly, as long as global growth does not show signs of a turnaround, commodity currencies will begin to suffer and potentially already in the process of reversing a trend it so powerfully dominated for the past 4 years (ie EURAUD, EURNZD, etc...)

Yesterday's session was another boring one with a tight range of 1.2518 to 1.2573. Is the Jackson Hole symposium this Friday really going to be the place where Bernanke is going to offer any concrete measures to revive the US economy? I think not, what would then trigger a big move? Let's go through a few scenarios here:
1. Bernanke hints of QE3 > US$ negative > E$ up
2. Bernanke disappoints with nothing explicit > Knee-jerk reaction E$ down > Market disappointed after all the anticipation > US$ negative > E$ up
Bearing in mind, all these happening within the full moon period which starts today!

Stop loss orders from yesterday's book revealed the following: 1.2490 & 1.2580. Other noteworthy limit orders: 1.2450, 1.2470, 1.2500/10, 1.2590, 1.2600 & 1.2650.

Technically, intraday indicators are showing a mixed bag of signals and momentum is pointing to further consolidation with a slight skew to the downside which is inline with E$ testing the lower trend line of the channel. Expect market to start positioning for tomorrow today. Meantime, focus on the range but I would prefer to buy the dip. Initial support at 1.2440/50, channel trend line at 1.2400/10 and stronger at 1.2350/60. Resistance at 1.2590/600 with stronger at 1.2640/50.
E$ 8hourly chart - Bullish channel
All the best!

Wednesday, 29 August 2012

Bull in disguise......

Good morning folks, its mid-week already!!

Market continues to stay within the bullish channel but fell short of the baseline before it rallied on the back of a wire comment that Fitch's Riley said US AAA rating is at risk of downgrade by H1 2013. The squeeze took out some weak shorts but overall it still lacks conviction.

Order book remains boring with only stop, within the recent range, at 1.2525/20. Strong interest remains at 1.2450, 1.2470, 1.2590 and 1.2600.

Technically, intraday indicator is in o/b level (not extreme) but momentum is starting to turn higher which has increased the probability of an extended rally. Other technicals in support of potentially higher E$ include price trading above the daily Ichimoku cloud and a bullish reversal bar yesterday enveloping  the past 2 days' range. Analyzing all available technical signals, I will not discount the possibility of E$ breaking higher towards 1.27ish first and then turning back sharply towards 1.24ish before it rallies again towards 1.3000. The weekly chart below indicates the lower lows which were countered by higher high momentum signal (bullish divergence) and that has increased the probability of an intermediate term bottom at 1.2042 being formed as mentioned in my earlier postings.
For today, a couple of opportunities I see....  a first test of 1.2590/600 and then falling back to low 1.25ish. Or if the low 1.25ish is tested first, then the possibility of taking out 1.2590/600 is much higher and extend towards 1.2700/10. Trade within 1.2500 to 1.2600 first but stay very nimble on the short side.

E$ Weekly chart - Bullish divergence
All the best!!

Tuesday, 28 August 2012

Stucked in the channel....

Good morning folks!!!

I thought it will be sluggish but it beat my expectations yesterday... it was totally dead!! Looks like the Jackson Hole symposium and month end this Friday is holding back all the actions. Even the German IFO number did not inject any excitement.

As evident in the order book, there seem to be a lack of conviction in the market, liquidity is definitely sub-optimal. Based on yesterday info, stop loss orders can be found at 1.2620 and 1.2390.

Technically, intraday indicators have slipped into o/s level. However, momentum is still showing scope for further probe to the downside. That being the case, I would stay patient to buy the dip toward the lower band of the channel and hope for the stretched rubber band to snap back.
For today, 1.2360/80 strong support with 1.2510/20 as initial resistance and stronger at 1.2580/600.
E$ 8-hourly chart - Bullish channel
All the best!!

Monday, 27 August 2012

Gravity rules....

Good Monday morning folks!!! Glad to be back infront of my screen after a 3-days charity event where cyclists covered 300km from Kuantan to Kota Tinggi (West Malaysia) in 2 days. Ahem, I volunteered as a photographer  :)  Check out some of my works in Facebook this week!

True enough, E$ had another push higher on Thursday and printed 1.25893 high for the week before spending Friday correcting itself lower as technical signals suggest lost of upside momentum. As seen in the chart, it seemed apparent that the E$ is contented to trade within the bullish channel until the next piece of positive fundamental news to take it exponential. Highest probability of that happening could be this Friday's Jackson Hole symposium, where central bankers, policy experts and academics gathered, because of the topics that they will be discussing on. Well at least it sounds like this time its not going to be another waste of taxpayers money event. For today, thanks to the German IFO business climate data to be announced at 4pm (Sin/HK) or it may be pretty lacklustre as UK will be out.

As a result of the short squeeze last week, CFTC speculative accounts is showing another drop in the net euro short position to -123,932 from -137,810.

Stop loss orders revealed from source last Friday shows the following levels: 1.2390, 1.2480 & 1.2620. Strong offers were seen at 1.2590, 1.2600 & 1.2650.

Technically, intraday momentum is suggesting further consolidation and last Friday's dark cloud cover formation, has increased the probability of further pressure on E$ to correct lower than Friday's range. Having also considered the fact that the topside band of the channel had just been tested and rejected, chances of sideways to lower price action ahead of Friday is highly likely.
For today, I expect up > down price action, but I would prefer to fade into rallies with 1.2560/80 to cap and 1.2420/40 to hold.
E$ 8-hourly chart
All the best and have a great week ahead!!

Thursday, 23 August 2012

Red bull !!

Good Thursday morning folks!!!

E$'s correction lower was shallower than expected as it merely managed to take stops below 1.2440 after several attempts, only to find Asian sovereign bid at 1.2430 as bullish divergence emerged. E$ then powered higher on the back of weaker US homes sales data and and subsequently another boost from the dovish Fed minutes to hit 1.2538 high during the NY session. Spilled over momentum this morning saw E$ touching 1.2544 before easing off. The 1.20-1.25 DNT which was supposed to roll over on the 5 Sep was initially a reason to scale back on the E$ long but by the Ldn session, the whole world was talking about it and naturally the stop order build up at 1.2510 became the beacon!!! Amid that environment, I was more than happy with my 30 pips I made from the short side but have to admit I passed on the rebound.

I do not have any information on any meaningful stop loss orders at this moment.

Reading 'Happy days ahead for EUR?' dated 15 Aug 12 again, it has become clearer that whatever happens in Europe, the negatives are already priced in and the E$ is going to hold above 1.2200 along with firmer EURxxx. In my earlier blogs, I mentioned that E$ needs to recapture 1.2400 to turn the weekly momentum up and it seems like its going to materialize now. This in turn will confirm a weekly bullish divergence signal which will increase the probability of higher E$ in the weeks ahead.

Technically for today, intraday indicators are all in o/b levels (not extreme) but I do not foresee a correction kicking in just yet till we at least see 1.2610/30 tested first. Momentum continues to point firmly up which reinforces that view. However, early signs of bearish divergence has emerged and we have to monitor the price action closely. In summary, I expect another wave higher in EUR but one has to be cautious as price may not be sustainable at the higher level in the short term.
Initial support at 1.2490/500 (first test) with stronger at 1.2440/60 and resistance at 1.2600/10 (first test) and stronger at 1.2630/40.
E$ 4hourly chart - Bullish channel
All the best and I shall update again next Monday. Have a great weekend!!

Wednesday, 22 August 2012

Touch me not.....

Good morning folks!!!

Today's update will be delayed.

Even before the European leaders met, the bears threw in the towel and decided to cover their short position due to the fact that E$ appeared stubbornly firm. Stop loss orders were tripped on its way up to 1.24875 high. Currently, I learnt that there is a 1.20-1.25 DNT in place and this probably explains the strong offers from 1.2480 up. I have no clue on the expiry just yet.

From what I have gathered so far, stop loss orders appear lopsided at 1.2440 and 1.2390.

Technically, intraday indicators are in o/b levels with momentum turning from up to consolidation. This has increased the probability of a correction in E$. If E$ is rejected in the 1.2470/80 region, one can expected a test towards 1.2390/400 with stronger support at 1.2350/60. Risk/reward favours selling rally today.

E$ Daily chart - Bullish channel
All the best and do note that there will be no update this Friday as I will be out of town.

Tuesday, 21 August 2012

Patience is key.....

Good morning folks!!

True enough, the range just got tighter and even more than I expected. This is really leaving us with not much room to trade with the appropriate risk/reward. Clearly market is awaiting development out of the eurozone leaders' meeting from tomorrow. For the past 9 days or so, majority of time had been spent trading roughly within 1.2260 to 1.2360, which is in the higher band of the recent range after the rebound from the 2 important lows at 1.2042 and 1.2134.

Stop loss orders can be found at 1.2240, 1.2305/00 and 1.2386/92.

Technically, as a result of price action spending more time hovering in the higher band, momentum is starting to turn from consolidation to slight upside bias. That being said, E$ desperately needs to recapture and trade above 1.2400 by this week or the weak weekly momentum may pressure E$ towards 1.21ish in the days ahead. I remain sidelined for now and will not be too quick to jump in on any break just yet. Just have a strange feeling that market may whip both ways to clear all stop orders lying just outside the range before it turns to where it wants to go subsequently.
E$ Hourly chart - Consolidation continues
All the best!!

One of the keys to successful trading is to know when to exercise patience and to react only when market unfolds.

Monday, 20 August 2012

Its going to get tighter.....

Goood Monday morning friends!!

No surprises and nothing spectacular happened on Friday as market continued to trade within the defined range. The price action unfolded exactly as outlined in 'Tail end of summer syndrome' 18 Aug Fri, except that it topped at 1.2382 instead of breaking 1.2385 before reversing to hit 1.22885 low during the NY session. For this week, scheduled economic data releases will be light with focus on RBA and Fed's monetary policy minutes due out on Tuesday and Wednesday (trading day) respectively. The wild card will be the European leaders' meeting scheduled from 22-25 Aug where news will impact market randomly. So its going to be speculation on QE3 (E$ positive) and solutions from eurozone leaders (E$ positive). Of course, not forgetting the flip side if any did not materialize.

CFTC speculative accounts showed a marginal increase in the net short position of euro at -137,810 from -131,711 the week before.

On the orders front, it is interesting to see a pattern developing. Stop loss orders are lined from 1.2240, 1.2270 and 1.2445/50. Strong offers lining from 1.2382-00, 1.2445/50, 1.2460/65 and 1.2485 and strong bids 1.2256 and 1.2240. Don't read too much into the orders as they can be quite fluid. Your foundation should and must always be a properly analyzed technical view to start off with and the rest of the info is just nice to know but not crucial.

Technically, intraday indicators have all moved to neutral position i.e neither o/b or o/s and momentum continue to hint at further consolidation within the band but tapering. I have a mixed bag signals with my daily showing slight upside bias, weekly still staying below the pivot level and monthly momentum still pointing firmly lower. After taking EURxxx into consideration, I would wager for a slightly more positive bias for E$ by end of the week. Admittedly, this is a low percentage call and let's just take one day at a time.  Intraday techs are suggesting E$ to test lower band at around 1.2250/70 before getting sucked back into the range. Normally, I refrain from trading when market is in the perceived 'D' and 'E' waves for the obvious reason that a breakout is imminent and one's chance being 50/50. If you must, then trade half the size, within 1.2380/400 to 1.2250/70 with tight stops.
E$ 4hourly chart - Price action tapering to apex
All the best!!

Friday, 17 August 2012

Tail end of summer syndrome....


At one point yesterday, I thought I was dead wrong on my view!! Good thing I stucked to my game plan and placed my stop below 1.2240 and stayed away from my desk. See, that's how I deal with the emotional aspect of trading!  :)

After triggering a good amount of new sell stops, from the macro guys, below 1.2270 on Wednesday, E$ went for another batch of new sell stops, from the system guys, below 1.2260 to touch 1.2256 low on Thursday before the squeeze begun during the NY session. Of course the market attributed the E$ rally to the weaker US data and Merkel's reiteration of their pledge to save the euro. The move picked up steam as those shorts scrambled to cover their positions. E$ peaked at 1.23725 and started its consolidation till now.

Last update on existing stop orders revealed the following: 1.2150, 1.2240, 1.2380 and 1.2450. Nearest being 1.2380 will sure stick out.

Technically, intraday indicator has gone into o/b levels but not extreme. Intraday momentum continues to suggest consolidation with no directional implication. Looking at the chart below, it does look like E$ is comfortable to just consolidate further until it reaches the apex, probably next week. However, on the daily chart, yesterday's price action has formed a bullish engulfing candlestick with a strong close above support levels. Having taken everything into consideration, my highest probability scenario is that E$ to spike another round to take previous high 1.23856 out and then reverse to fall towards 1.2280/300 support, stronger at 1.2240/50. Resistance 1.2400/10 and stronger 1.2440/50.
Therefore, risk/reward favours selling into rally. Breaking either 1.2443 or 1.2241 confirms near term trend.
E$ 8hourly chart - Range tightening
All the best and have a great weekend. To all my muslim friends, Selamat Hari Raya!!

Thursday, 16 August 2012

Just a little squeeze....

Good morning folks!!

In a day lacked of market moving fundamentals, it was just about gunning for stop loss orders. Heard during the NY session that the last batch of stops triggered were just below 1.2270, very decent size ones from some macro guys and it was new stop sell orders (they were expecting market follow through). After triggering, low hit was 1.2264 before market rebounded and stayed around 1.228ish for the rest of the night.

The rest of the surviving stop orders from yesterday's update are 1.2240 and 1.2385/90. I believe market should be caught alittle short and an update later should reveal more buy stops above.

Technically, shorter intraday indicators are in o/b levels as a result of this morning's rally up to 1.2306. Expect consolidation with slight downside bias to unwind before higher again. Momentum has turned from down to consolidation and expect trading range 1.2270 to 1.2340 first and if expanded, would see 1.2380/90 retested again. In line with yesterday's call, I still maintain buy dip strategy.
A break of 1.2240 would invalidate short term buy view.

E$ 4hourly chart
All the best!!

Wednesday, 15 August 2012

Happy days ahead for EUR?

Good morning folks!!

As expected, the market spent most of yesterday's session probing on the downside after a French name bought the E$ to day's high of 1.2386. Asian sovereign name was heard to be offering as the E$ extended its last wave up. From my observation, price action from the high to current levels has been corrective so far.

What's in the stop loss order book? Last heard sell stops at 1.2240, 1.2260 and buy stops at 1.2385/90 and 1.2450 mixed with strong offers on both levels.

Technically, overnight consolidation has brought intraday indicator back to o/s levels (not extreme). Momentum has turned to consolidation with no hint on direction just yet. However, a few observations put together do suggest that there is a slight skew towards higher E$. Just to mention a couple.... despite the correction yesterday, E$ held support just above 1.2300. Secondly, to further reinforce the E$ daily chart price breakout, we have similar situation in the EURAUD too (see charts below). Do note that a rally in EURAUD has far wider implication for the financial markets than just a stronger EUR on the surface. Rally in EURAUD would imply risk off = sell off in risk assets = lower equities = lower commodities = stronger USD = EUR adopting a pseudo USD status. Something is cooking which may trigger a risk event but nobody knows what it is at this point in time but given that EURAUD is turning up, it seems obvious that it cannot be Europe related..... just a logical speculation  :)
For today, I don't expect drama but further consolidation within 1.2300 to 1.2400 for now. Last week's low of 1.2241 would be vulnerable if support at 1.2270/80 fails.

E$ Daily chart - Bullish signal

EURAUD Daily chart - Bullish signal

All the best!

Tuesday, 14 August 2012

E$ taking a break....

Good afternoon folks!

E$ continued to push higher from the spillover momentum from last Friday and took out the last batch of stops above 1.2365/70 to touch high of 1.23735 before easing off. Underlying tone remains firm as EURxxx continue to unwind from their short positions. The German ZEW number should add some life to the market later at 5pm (Sin/HK). Asian sovereign supply is heard at around 1.2365/70 which coincides with some technical resistance. This should encourage some profit taking where price may drift lower to support levels.

For stop loss orders, last heard were lurking at 1.2374, 1.2260 and 1.2240. Also heard a large option expiry with strike at 1.2300.

Technically, shorter intraday indicator is showing o/b condition and the momentum is turning from up to consolidation. Though on a daily basis, E$ closed with a bullish engulfing candlestick pattern, it does look like market is due for a correction lower first. As in the chart below, breaking and staying above the trend line has also increased the probability of further upside for the E$. In summary, risk/reward favours buying on dips for E$ to retest yesterday's high to 1.2390/2400 later.
For today, 1.2310/20 to hold with stronger support at 1.2270/90. Resistance stands at 1.2390/2400 and then 1.2430/50.
E$ Daily chart - Broke trend line on the upside
All the best!!

Monday, 13 August 2012

Base forming.....

Good morning folks.... Rory McIlroy from Northern Ireland won the 94th PGA Championship by a record 8 strokes to take home the Wanamaker Cup!! Tiger only managed 10th place with his usual lack lustre weekend play. Opportune time for Titleist to announce the arrival of the latest 913 drivers :)

Last Friday, E$ really tested my resolve as it spent most of the time probing the downside to 1.2241 but the rebound finally came fast and furious as E$ bears scrambled to cover their short positions as E$ popped to a high of 1.2317 before easing to current levels. On the data front, it will be light today with focus on German ZEW tomorrow.

I have no updates on the stop loss orders as of now.

Technically, longer term intraday indicator is starting to turn up from its o/s levels with signs of mild bullish divergence. Momentum is starting to turn from down to consolidation with an upside bias. These signals suggest a bottom has been formed and has increased the probability of further recovery in E$ today.
For today, R/R favours buying on dips. 1.2240/60 to hold with stronger support at 1.2190/2200. Resistance at 1.2380/90 with stronger at 1.2440/50 for now.
E$ 2hourly chart
All the best and have a great week ahead. Blog update will be delayed tomorrow as I have an early morning tee-off with my buddies.

Friday, 10 August 2012

Pattern to repeat again?....

TGIF folks!!

No new fundamental as market retraced further to a low of 1.22666, just shy of the 61.8% level of 1.2352.

Last level of sell stops flushed was at 1.2290 and remaining ones based on yesterday's information are at 1.2392 and 1.2450.

Technically, intraday indicator has very much unwound its o/b condition and has slipped into o/s level though not extreme. Momentum continues to suggest consolidation. However, price action is showing some signs of support around 1.2280/90. If we look at the chart below, then the next phase should be one where E$ should rebound. Considering all available technical signals, probability has a 60/40 skew towards higher E$ today.
For today, 1.2250/60 to hold (stronger at 1.2200/10) and 1.2380/90 initial resistance (stronger at 1.2440/50).
E$ 2hourly chart - Further pattern repetition?
All the best and have a great weekend! Will be bringing my boy for his golf theory and skill test shortly. Be back for Europe session.

Thursday, 9 August 2012


Happy birthday Singapore!

Good morning folks, today we celebrate our nation's 47th birthday, a relatively young country, huh.

Reports that Italian Prime Minister Monti is facing pressure to reject a bailout was the only meaningful eurozone related news and that was probably the only reason to send the E$ lower, albeit in a controlled manner.

Stop loss orders were cleared at 1.2370 and 1.2342 and from yesterday's update, those at 1.2450 is still around.

Technically, shorter intraday indicator is nearing o/b levels, though longer term ones still have room for further upside. Momentum has turned flat and suggest further consolidation for now with risk of an eventual breakout within the next 48hrs. Having fallen to the low of 1.2327 yesterday has already achieved my first target of the correction lower. But that was only the 38.2% target, the 50% and 61.8% being 1.2288 and 1.2252 respectively. However, I have a mixed bag of signals now which is making today's call quite tough. Having considered all available information, I prefer to eventually trade on the long side, but its just a matter of level. I have to admit that if I have to force a view today, it will be a low percentage call. Will just have to monitor the movement and trade accordingly as signals evolve.
For today, strong support at 1.2250/70 and initial resistance at 1.2450/60, stronger at 1.2520/30.
E$ 2hourly chart - Pattern repetition?
All the best... whatever you do, place a stop loss order.

Wednesday, 8 August 2012

Gravity rules....

Good Wednesday morning, folks!!

A pretty well behaved market throughout the whole session with an upside bias as expected. Clearly, the strong offer at 1.2445 has managed to thwart E$'s attempt at the option barrier and stop loss orders at 1.2450 for now and that encouraged E$ to turn south to seek the path of least resistance. However, market was again faced with decent bids ahead of 1.2400 as this market player was defending an option just prior to expiry.

Stop loss orders are very light on both ends with only 1.2450 and 1.2370 highlighted.

Technically, intraday indicators have slipped into o/s levels and coupled with signs of mild bullish divergence, it has increased the probability of a near term bottom and rebound. As a result of the consolidation within a tight range, longer term intraday momentum is starting to turn from a mildly bullish tone to consolidation. On a daily basis, E$'s inability to close above the MA50 also indicate relative weakness. Closing 'doji' would warn of potential volatility. To summarize, probability has increased for E$ to correct lower today but bearing in mind that I am on a weekly basis, still bullish. Therefore, I maintain my strategy to scalp on short again and position for long.
For today, 1.2410/20 provide first resistance with stronger at 1.2460/80 and support at 1.2320/30 and stronger at 1.2260/80.
E$ Fibonacci Retracement levels
All the best, remember to stay nimble on your shorts!  :)

Tuesday, 7 August 2012

Consolidation to go on....

Good morning, folks!!

A pretty boring session yesterday if you had missed the early rally to 1.2443 as market consolidates gains from Friday. Hopefully, we get some stimulant from the RBA's rate decision at 12.30pm later.

Last I heard on the stop loss orders were only those residing at 1.2450.

Technically, shorter term intraday indicator has moved to neutral but the longer intraday is still in the o/b level, which suggest a correction lower is needed to unwind and it is also healthier to form a base before the next leg higher. Shorter term momentum has turned to neutral and consolidation but longer term ones are suggesting consolidation to up. To summarize, for today, I am expecting E$ to consolidate further and trade lower first but with a risk of a spike towards 1.2460/70. No change in the strategy from yesterday. If E$ rallies again (provided 1.2300/20 is not seen first), 1.2460/80 should provide good resistance on first test. For those who are more comfortable riding the trend, then look to buy dips. Breaking 1.2134 will invalidate short term bullish view.
For today, 1.2290/310 to hold (1.2250/30 stronger support) and 1.2460/80 initial resistance and stronger at 1.2540/50.
E$ 4hourly chart - Fibonacci levels
All the best, I will be putting in a sell order (of course with stop) and will be going for 9 holes now. Will be back for Europe session.

Monday, 6 August 2012

Bull behind the steering wheel.....

Good Monday morning, folks!!

For those who were never convinced of the full moon effect, I hope last Thursday and Friday's price actions would have gained a little of your respect  :)

Friday saw market short covered ahead of the weekend so-called troika meeting. Of course, when it concluded on Sunday, this was what you can take away from the joint statement by the EC, ECB and IMF... "The discussions on the implementation of the program were productive and there was overall agreement on the need to strengthen policy efforts to achieve its objectives." Ok, whatever positivity you can squeeze out of that statement but as usual they will be returning to Athens in early September to continue the discussions... anything new? However, the reassurance from Italian PM Mario Monti that Italy does not plan to seek financial aid from its Eurozone peers was the impetus for E$ to push through resistance at 1.2400. Another factor for E$'s bullishness is probably because market is refocusing on US QE3 now.

Latest CFTC speculative accounts again trimmed their net euro short position to -138,994 from -155,066.

A quick recall on the Elliot wave count (read from 31 July).... the corrective 'C' wave actually ended at 1.2134 on early Friday morning and the new impulsive wave is unfolding and this put 1.2700 in the radar.

Technically, intraday to daily indicators have shot itself into o/b level and it seemed like a consolidation at this stage is required to unwind that condition. Intraday to daily momentum have turned up with the weekly turning from down to neutral, whereas the monthly continues to be pointing lower. That being said, the probability of higher E$ in the coming days has increased substantially. However, at this stage I identified 2 way opportunities depending on your risk appetite. If E$ rallies again, before Europe comes in (provided 1.2300/20 is not seen first), then I believe at 1.2460/80 region provides good resistance for this round to fade into (against trend). If not, I will be looking to buy into dips.
For today, 1.2300/20 to hold (1.2250/30 news induced) and 1.2460/80 initial resistance and stronger at 1.2540/50.
All the best and have a great week ahead!!

Friday, 3 August 2012

Draghi's Drag.....

TGIF folks!!!

"It is pointless to bet against the euro, its pointless to go short on the euro because its here to stay and its irreversible", so says Draghi but not my bank account!  :)  

So did you witness and experience the full moon effect last evening? This is one great example of the kind of volatility one should be mentally prepared for.... smacked on the exact day itself. Not enough of action? we still have the US employment numbers tonight though I do not foresee a move of the same magnitude.

Let's recall the sequence of events..... E$ stayed firm throughout the session into ECB's rate announcement and reached 1.2300 on buying around the ECB fixing. It pushed further to 1.2330 ahead of Draghi press conference. E$ then spiked to touch 1.2406 high as Draghi hinted at bond buying. But on further analysis, market became uncomfortable with the "may buy" and very quickly sellers emerged and sold the E$ big time as it slid to 1.2173 within 30 minutes! Clearly, the pair was gunning for stop loss orders at 1.2180 and 1.2170. E$ subsequently hit the low of 1.2133 before it consolidates for the rest of the night.

On the stop loss orders, no updates yet as all were flushed yesterday. But it was really useful to learn that buy stop orders were lurking at 1.2310 and 1.2350 by late afternoon before the ECB announcement. That actually had me thinking if we may see a deeper 'B' wave and revert to Wednesday's resistance levels ('Mark time for FOMC', 1Aug). In detail, from 1.2390-1.2227-1.2336-1.2218 actually formed a-b-c (A wave) and a-b-c-d-e (Irregular B wave) and then from 1.2406-? (C wave).

Technically, we probably have seemed the completion of the 3rd wave of the 'C' and in the process of 4th before another dip for 5th wave to complete the corrective 'C' wave. Intraday indicators are in o/s levels though not extreme but this consolidation should unwind a little. Shorter intraday day momentum is still pointing lower but longer intraday ones are still suggesting range consolidation between 1.2050 to 1.2370 now. There are signs of mild bullish divergence and that probably reinforced the view that we are nearing a bottom from yesterday's sell-off. That being said, I must warned that I still have mixed signals because my weekly and monthly momentum indicator is still pointing firmly lower.
In short, risk/reward favors buying dips (provided 1.2220/30 is not seen first). 1.2100/10 to hold (1.2060/80 stronger support with 1.2042 being recent low) and 1.2220/30 first resistance and stronger at 1.2360/70. A break and close below 1.2042 would suggest a continuation of the bearish trend.
E$ 15min chart - Full moon effect
Apologies if I had it a little too technical today but just want to share my Elliot wave count with friends who can relate. All the best, stay nimble and have a great weekend.

Thursday, 2 August 2012

Now what's next?....

Good morning, folks!

Market completed the counter directional 'B' wave at 1.2336 yesterday (read Month End + Full Moon = ? on 31Jul Tue) and started the impulsive 'C' wave down in reaction to the FOMC decision. Fed left rates unchanged and signal that they want to keep it exceptionally low through end 2014. Frankly, I thought there was a repeated hint of QE3 but market has chosen to buy the USD for now. Let's see what ECB has for us this evening......

By the way, if you are wondering why I was showing the monthly chart for the past 2 days.... its because I want to remind ourselves that E$ has broken a 10year trend line and last month price was rejected on retest. Nothing is guaranteed by a single signal but it has increased the probability of further weakness to challenge the previous low of 1.1875. For all you know, the rebound may come right after that  :)

No updates on the latest stop loss orders just yet but based on what I had yesterday, those at 1.2305 and 1.2225/20 have been cleared and we are left with the sell stops at 1.2180/70.

Technically, intraday indicators are at o/s levels and coupled with its inability to break the support zone of 1.2200/20, it has increased the probability of a consolidation with an upside bias from here to unwind. Supporting that view, though a little premature, the intraday momentum has shown early signs of recovery. Daily momentum continues to suggest range consolidation between 1.2100-1.2400 for now. However, with a daily bearish engulfing pattern formed yesterday reinforced by E$'s inability to hold above 1.2300, the probability of E$ probing into the lower end of the range has increased overnight. Therefore, risk/reward favors fading into rallies for today.
For today, 1.2270/80 to cap (1.2320/30 news induced) and 1.2120/00 to hold (1.2080/70 news induced).
E$ Monthly chart
All the best!!

Wednesday, 1 August 2012

Mark time for FOMC....

Good morning everyone, its August already and F1 will soon be round the corner. The first and only night race (for now). It gets me all excited especially when you see the start of the preparation with all the barricades and flood lamps lining the road circuit.

Mid-week and a new month but guess market has decided to only spring into action probably post the FOMC rate decision and statement in the wee hours of Thursday.

Stop loss orders remain at exactly the same levels despite the 1.2305 being cleared yesterday. Sell stops are still lurking at 1.2225/20 and 1.2180/70.

Technically, daily momentum continues to point to further consolidation and seems like a precursor to a subsequent powerful breakout. 1.2400/20 remains an important level as a convincing break and close above will signal more ambitious gains to retest previous high of 1.2747. But for now, I maintain 60/40 probability for E$ to fall back into the 1.2080/40 area. Past 24hrs price action suggest strong support in the 1.2240/60 region and a base seems to have formed for E$ to be propelled higher to test 1.2400/20 but I do not foresee that level being taken out on the first test.

So to summarize, 1.2240/60 to hold (1.2200/20 news induced) and 1.2360/70 to hold on first test (stronger resistance at 1.2400/20).
E$ Monthly chart
All the best!