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 |
No comments:
Post a Comment