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).
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| E$ Monthly chart |
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