Another day where market is happy just to stay within the defined range (1.2890 low to 1.2979 high) without much conviction ahead of Thursday EU leaders meeting.
To add to my observations yesterday, another sizable group of tourists who caught my attention was the Russians. They appeared to enjoy the sightseeing part rather than to indulge in branded goods. To conclude, it may just be a week out in Italy but it was very clear that tourists are no longer swarming the boutiques. Sadly, the salespeople did not seem to know the gravity of the situation but still happily enjoying their free time chitchatting. Wait till you read about France's Article 6 of the new tax law, which raises the top rate of capital gain tax from 34.5pc to 62.2pc. Its like trying to put fire out with petrol. Europe, I am afraid is going to get worse before it gets better. That being said, does that mean the E$ is going lower from here? Question remains on how much of these negatives have already been factored into current level. Only the technicals will shed some light ......
Order book appears to be quite packed, with stop loss orders at 1.2780/90, 1.2890, 1.2990/00, 1.3010/20 & 1.3050. Noteworthy limit orders at 1.2800/20, 1.2845/55, 1.2990/00 & 1.3050.
Technically, intraday indicator is close to o/b zone following yesterday's rally, though there is still room to push higher. Momentum is pretty flat across the range with indication of further consolidation. With the daily close forming a 'doji' yesterday, there may be some spillover momentum to take E$ slightly higher today. Top trend line of the wedge stands at 1.3020 today.
To summarize, I expect trading range to confine between 1.2880/900 to 1.3020/50 on first test. From here, I prefer to sell into rally. However, one has to be very careful as price action tapers to the apex. Stay disciplined, stay nimble.
All the best!
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| E$ Daily chart - Consolidation to continue |
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