Guess I don't have to repeat what the Fed's decision was in details here as you probably have already read it somewhere else. Gathering from the people that CNBC interviewed last night, the consensus has it that they were surprised by the 'unlimited' amount of QEternity (can I have a patent right on this word, Apple?). Whether is it politically driven, I am not here to discuss that. The fact is, the equity markets love it which also correlate to a weaker dollar. Do not underestimate the effects of Fed's latest decision, it can be more far reaching than we think. Last night's price action was relatively disciplined and controlled considering how big the news was, as E$ crept higher forming higher lows and higher highs by the minute. Based on time and price, it did not over-extend itself. This is a more sustainable price action than if it had spiked and turn exponential towards 1.3000.
It all began with market first turning lower to flush some weak sell stops earlier in the evening before turning around to clear the buy stops at 1.2940, 1.2950 (large), 1.2975 and 1.3000. At this moment, I have no updates on the outstanding stop loss orders.
Apparently, market is still keen on selling the E$ on rally around 1.3000, which of course I was flirting with that idea too. But having seen last night's price action and the renewed upward momentum, I would rather stay friendly with the underlying trend. Last night, I executed according to scenario 3 and bought E$ on the dip and took profit just before Bernanke spoke. Sweet again!
Technically, intraday to daily indicators are pointing to extreme o/b condition but I have mentioned before that in a trending market, these indicators can get 'stucked' right up there. Upward momentum is strong and the step fashion price action signals strong underlying bid tone. My initial target of 1.3000 has now been achieved (Breakout, 10 Sep, Monday) and E$ should be eyeing at the resistance band around the 1.34ish levels (see chart, the eclipsed area) which also represents the 50% fibonacci level.
Today's expected trading range from 1.2940/50 to 1.3050/60 and I prefer to trade from the long side. Risk should be kept to 1.2850.
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| E$ Monthly chart - Reversal |
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