Tricky conditions....

Good afternoon, folks! Apologies for the late update. Completed the first half but had to rush out to meet friends from overseas and only just got back about an hour ago.

Hope everyone had an enjoyable Halloween weekend. But definitely not forgetting our friends living around the North Eastern shore of the U.S. of America as Hurricane Sandy heads for landfall within the next 24-36hrs. Do take care!

Admittedly, I have hardly been tricked by the market twice within a week, but I was last week. In view of that, it is getting apparent that market liquidity is probably sub-optimal (made worse today by the shutting of the US market today) and getting jittery ahead of the U.S. election. Understanding that we are already into that zone before the huge risk event, I will have to change my trading strategy and adapt accordingly in this environment by increasing the notional amount marginally and trade within a tighter range instead of the wider expected daily range (i.e. within support/resistance).

CFTC speculative accounts showed that net euro short contracts have increased very marginally to -55,219 vs -53,495. Net short jpy has flipped to -18,196 vs +10,086.

Order book from last Friday revealed the following:
Stop loss: 1.2880 & 1.3025
Limit: 1.2800/05, 1.2850, 1.2880 and 1.3000

Technically, intraday indicator is nearing o/s level though not at extreme. Intraday to daily momentum continues to point lower though the weekly is still pointing higher (may be lagging). There are conflicting signals and that is not totally unexpected at this stage. However, a few signals will continue to weigh on E$ at this point in time:

• Price unable to stay above the 21DMA (see graph).
• If price action continues to hover around current levels, it will soon trade below the rising trend line.
• Bearish divergent signal has already emerged on EURAUD which has increased the probability that it has formed a top and in its counter-directional move i.e. down.

For today at this point (1.2898), expected range 1.2830/40 to 1.2960/70. I would look to buy on dip closer to 1.2830/40 on first test for a bounce for 1.2880/90 with a tight stop. For the next few days into the U.S. election, I will be adopting smaller range scalping

E$ Daily chart - Retested 21DMA but above rising trend line