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.
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| E$ Daily chart - Broke trend line on the upside |
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