Hopefully, someone benefitted from shorting E$ overnight as 1.2940/50 held :)
Fundamentals are definitely not supporting the E$ and it will take guts and belief to trust the technical signals if it ever points up. Market focus for now is on Spain's impending request for a big time bail-out but Angela Merkel is going to tell them to hold their horses. Probably by late Thursday to Friday, attention will then turn to US's employment data. But from now till pre-US employment numbers, we have to see how long we are going to be stuck between 1.2800/20 to 1.2940/50. During this period, stop loss orders should accumulate even more just outside these boundaries.
Currently, the stop loss orders are residing at 1.2760-80, 1.2800, 1.2820 and 1.2940-50*. Large limit order at 1.2740*. A couple of levels (*) are pretty strategic from a technical point of view.
Technically, intraday indicator is at relatively neutral level. Momentum is suggesting consolidation to down from current level. But also note that there is sign of bullish divergence in the intraday momentum. The DMA21 (red) has been traded through either way for the past 3 days, so it seemed to have lost its significance for now. Yesterday's close has actually formed a bullish piercing pattern and that has increased the probability of E$ retesting 1.2938 high. A pretty mixed bag of signals, confused?
In summary, I expect choppy price action to prevail today with trading range of 1.2800/20 to 1.2940/50 but with a higher probability of the upside being broken but capped below 1.2980/90. I prefer to buy dips with risk to 1.2740.
All the best and a heads up that there will be no updates from 8-12 Oct as I will be away.
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| E$ Daily chart - Golden cross a lagging indicator? |
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