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.
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| E$ 4hourly chart - Price action tapering to apex |
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