Monday, 26 November 2012

E$ Bulls edged the Bears

Good afternoon folks! This will be my last update before I head for my year end holiday and the next update will be from the 20th Dec 12.

E$ exceeded my expectation last Friday by printing a high of 1.2991 even though I have made provision for that move. As I have mentioned in "8 = Prosperity", dated 23 Nov 12, a convincing close above 1.2900 now would be a bullish signal for this currency pair despite the fact that it is still staying below the trend line (see chart). On the daily chart, it is already staying above the 21, 50, 100 and 200DMAs. On the weekly chart, it is staying above the 21 and 50WMAs but still below the 100 and 200WMA at 1.3405 and 1.3510 respectively. Daily momentum remains strong but we are nearing o/b condition and this has increased the probability of a near term consolidation. On the upside, the easy money phase is probably over for now. The next phase of this climb will be faced with more intraday volatility. Today, we have EU leaders meeting once again and any lack of commitment should send the E$, which at current levels is more vulnerable, lower.

Order book this morning revealed the following:
Stop loss: 1.2730/40
Limit: 1.2850/70 and 1.3000

Technically, intraday indicator is in o/b levels and any rally here may not be sustainable. Intraday momentum is starting to show signs of turning from up to consolidation. I would expect price to soften back to retest 1.2900 but am wary of a possibility of deeper correction to 1.2840/60. Having said that, I would still prefer to buy on the dip.
For today, 1.2900 (1.2840/60 news induced) to 1.2980/90 (1.3030/40 expanded)
In the weeks ahead, as long as 1.2900 pivot holds, we are probably in for a progressive appreciation of E$ to challenge previous high of 1.3172 with the next target at 1.3400.
E$ Weekly chart - Close to trend line with strong momentum
The easy money rally phase is over and the next phase will take us off road with more intraday volatility but still headed for the objective of Y85. For this week, the expected range is from Y81.70/80 to Y83.40/60.
USDJPY Monthly chart - Staying afloat
All the best. Whatever you do, always remember to put in your stop loss order and protect your profit. I will catch up with all when I return.

Friday, 23 November 2012

8 = Prosperity

TGIF folks!!  2 more trading days before I head off for my year end holiday  :)

Yesterday's session was dominated by Asian players. Heard the demand in the afternoon session came partly from BOK (Bank of Korea) which recently intervened to buy USDKRW and now wanted to switch the USD holding (worth approximately USD1.5billion) to EUR. As expected, E$ was then pushed to print a high of 1.28988 before meeting with Asian sovereign supply ahead of an option barrier at 1.2900. I will not dispute the authenticity of that rumor when the footprint that was left behind clearly indicated the Chinese presence. In case you are unaware, the number "8" is auspicious because it sounds like prosperity in Chinese and we love that number. The rich and famous are even willing to pay hundreds of thousands just to bid for one to be placed on their car plate. Heard that they have recycled it at around the 1.286ish level.

Order book is really thin now based on last night:
Stop loss: 1.2730/40 and > 1.2900
Limit: 1.2900

Technically, intraday indicator is at o/b level but not extreme. Intraday momentum has shown signs of bearish divergence which has increased the probability of a near term top around 1.2900. However, the daily upside momentum remains firm and pointing higher. This bullish view is supported by the break up from the trend line (see chart). Currently we are trapped between 2 pivot levels i.e. 1.2820 and 1.2900 and a close below or above them should confirm a continuation in that direction in the near term. Having considered all available technical signals, E$ bulls have the edge for now.
For today, one can still try to trade the 1.2800/20 to 1.2900/10 range again (1.2950/80 expanded) and I prefer to buy the dip with risk below 1.2870.
E$ Daily chart - Bulls have upper hand
Sign of bearish divergence followed by a rejection around 82.84 high to close lower yesterday was merely a mild consolidation of its recent parabolic move. Support level has moved higher today to 82.00 and I still maintain a bullish picture for USDJPY in the coming weeks. Initial targets Y84/85.
USDJPY Monthly chart - Break out and up
All the best!

Thursday, 22 November 2012

EUR up, JPY also up!

Happy Thanksgiving to all my friends round the world. Peace, No War please... civilians (kids and women) are dying!!

Clearly, yesterday's E$ range was pretty much a 3 in 1, an accelerated move which combined today and part of tomorrow into last night's price action. Normally the case when US is going into a super long weekend. Just by looking at the chart below, without too many other technical analysis, one would quickly conclude that E$'s ability to stay above another 3 & 1, the 3 DMAs (red-21, blue-200, brown-100) and just below 1 DMA (green-50), is a near term bullish signal. With market caught short as evident in the CFTC data ("Shortened week & poor liquidity", 19 Nov), a move back and close above 1.2900 (a crucial pivot level) would turn the technical quite bullish and could put the recent high of 1.3169 back on the radar again. EU leaders will meet on Monday (again) to discuss on the aids for Greece but the chances of a partial solution will get higher and this could be factored in by this week.

Order book updated this morning:
Stop loss: 1.2700, 1.2730, 1.2870 and 1.2910
Limit: 1.2880-900

Technically, intraday indicator is close to o/b level but not extreme and should still have room on the upside in a trending market. Intraday momentum remains firmly pointing up. 2 days of the long shadow doji (close) formation supports the bullish pictures. With a sharp reversal just yesterday, we may not see a deep correction before the next stage of the rally continues.
For today, before 1.2880/900 is tested, I am looking to buy dips. Expected range 1.2800/20 to 1.2880/900 (1.2950 expanded).

Do take note that market liquidity will be sub-optimal and expect a bit of whipsaw.
E$ Daily chart - Staying above 3 and just below 1... bullish signal?

Upside momentum is fading on the JPYxxx and USDJPY should be capped below Y83.00 for now and a consolidation towards 81.80 is highly likely today.

Wednesday, 21 November 2012

Near term reversal?

Good afternoon folks!!

Myth busted that golf is not a physically demanding game. Wait till you play 18-holes in an undulating course with a push cart (in Singapore) under 35 degrees Celsius (definitely felt like it) temperature with almost 90% humidity!! Looks like I need to jog 5km regularly to bring my fitness level to par.

On the market.... E$ almost closed with a doji formation (see chart) yesterday and today, it looks like an evening doji star formation at this moment. From yesterday's close, market was already all set for the negative news and it came when Germany's Schaeble announced that no agreement has been made and that the ministers are due to meet again Monday (are we so not surprised??). Failure to penetrate the 21DMA (see chart) and a subsequent rejection at that level is the first bearish signal for the E$. However, we are probably at the crossroad now with price stucked between 1.2750 and 1.2775 with a break either way would see a continuation in that direction for the next 4 hours.

Order book as of this morning:
Stop loss: 1.2700/05, 1.2720, 1.2828/30, 1.2900 and 1.2910
Limit: 1.2700/05, 1.2720 and 1.2900

Technically, shorter term intraday indicator is at o/s level though not extreme. Intraday momentum has turned from down to consolidation to up after it held 1.2737 for up to 4 hours but it is not conclusive. Taking all available technical tools into consideration, the bears have an upper hand now unless it recaptures 1.2775 to relieve the short term sell pressure. A close below 1.2740 today will put more pressure on E$ to retest recent low of 1.2661.
Expected range today: 1.2690/700 to 1.2820/30

Will update when I see opportunity in other currency pairs. All the best!
E$ Daily chart - Rejected at 21(red) DMA

Tuesday, 20 November 2012

Awaiting good news...

Good afternoon, folks!

Does jogging 5km everyday protects someone in their 40s from stroke totally? The answer is NO, bottom line, watch your diet..... you are what you eat. Someone close recently had a mild stroke and today had a stent implanted in the artery at the neck to prevent future recurrence. Tomorrow, I will be playing my 18 holes and have recently switched from the luxury of moving around in the golf buggy to using a push cart instead (not even battery powered). Starting to enjoy walking as I can study the green better as I approach from the fairway.

When all eyes are on the EU Finmin meeting today, Moody's stole the limelight by downgrading France by 1 notch in the early morning sending E$ back below 1.2800 to 1.2765 low. However, bid appeared and supported the currency pair. Sub-optimal market liquidity is already evident and can only get worse each passing day.

Order book is quite empty now:
Stop loss: 1.2750, 1.2830/40 and 1.2880

Technically, intraday indicator is at pretty neutral level. Intraday momentum is getting a bit mixed too due to this morning's sell-off and it has fractured and weakened the nearer term picture with a risk of testing lower to 1.2730/40 if we continue to hover around current level for too long. However, longer term intraday momentum is still pointing firmly higher for now.
For today, expect trading range 1.2730/40 to 1.2830/40.

E$ Daily chart - Fighting with MAs
Just to put in a monthly chart for all to see the break out and up from recent consolidation.
USDJPY Monthly chart - Bouncing off 21MMA (red) to 50MMA (green)?

Monday, 19 November 2012

Shortened week & poor liquidity....

Gooood Monday morning folks!!

Had a reasonably great week but had to give a little back on Friday as the E$ decide to correct lower first before higher again. Right after testing the 100DMA at 1.2800 on Thursday, E$ does not have enough momentum to push further as uncertainties continue to lurk ahead of the Nov 20 EU Finance Minister meeting. This gave market the opportunity to long liquidate and flush large sell stops at 1.2700. I was already a little apprehensive when it broke the shorter term up-trend line (see chart) but decided to hang in there with a tight stop nonetheless.

This week is kind of a shortened one for the Americans as they celebrate Thanksgiving on 22 Nov (Thu). Most traders would have planned to head home earlier and take the Friday off. So market liquidity will suffer and one should be mentally prepared for potential whipsaws, especially when E$ is still trading within the daily cloud.

Just to clarify my stand on the fiscal cliff's impact on the market.... I see market selling risk ahead of the deadline and this would translate to USD strength for now. However, at the back of our mind, we know the political leaders will come to a compromise and have a bipartisan resolution at the eleventh hour. Uniquely, this time round, selling risk may not affect all JPY crosses as we become more diverse.

CFTC speculative accounts revealed that net euro shorts have increased to -83,646 vs -67,141 and net short JPY surprisingly reduced to -30,447 vs -40,104. These information supports higher euro and weaker jpy.

No update on the order book just yet and this information is based on early Friday NY session:
Stop loss: 1.2650/55, 1.2680, 1.28025, 1.2810 and 1.2820
Limit: 1.2850

Technically, intraday indicator is on average around the 60% mark and there is room for more upside. Intraday and daily momentum remains firm and still pointing higher.
For today, expected range 1.2730/40 to 1.2830/40. 1.2800 remains as strong resistance. A break of 1.2690 will open up 1.2640/50.
E$ 2-hourly chart - All about trend lines
Fundamentally, the existing political uncertainties and further BOJ QE should continue to put pressure on JPY. Technically, this pair has also broken out and up from her slumber and we are probably looking for Y83/84 to be revisited in the weeks ahead. More elaborate technical analysis when I have the time.

Taken profit on the short USDCAD already ahead of target of 0.9940/50 and have decided leave this pair alone for now though tech indicators are still favoring lower USDCAD first before higher again along with USD strength.
Took profit on the quick run up in USDSGD but still maintain that it has broken up from its consolidation and expect to see higher USD in the coming weeks. Have re-established long again and keeping risk below 1.2220 for now. Immediate target 1.2350/60.

Friday, 16 November 2012

USD to reign.... (Update1)

TGIF!!! I hope you had a great day, if you know what I mean! Below are 2 trade recommendations that one will not be able to reconcile with today's title  :)

I have not been that active for awhile but yesterday was exceptional and I was kinda surprised when I looked at my trade blotter. I traded in EURUSD, EURGBP, EURAUD, EURJPY and USDCAD. Of course, as far as the EURxxx are concerned, it was entered at different phases and not all at a go. That is something I want to share for the purpose of learning. Never over-expose yourself on the same same currency cross just because they all gave the same buy or sell signal (they often do when broken out of range). In case you are wrong, they normally will be wrong for most. Learn to be conservatively aggressive even when trading with a high confidence level.

E$ finally retested the 100DMA (blue) as expected. So what's next? Not surprising, it seems like the market is starting to factor in a resolution to the U.S. fiscal cliff. It is not in the interest of whichever party to see the country fall further into the abyss as a result of politicking. There will be a bipartisan resolution at the eleventh hour! In view of that, I see a firmer USD environment going into year end. Then one will question me as to why the E$ would move higher then.... let me remind you once again that the euro is actually the next most popular left hand side currency. As the market sells the AUD, NZD, GBP and JPY against the USD, they buy the EURxxx too.

Order book is reflecting active participation too:
Stop loss: 1.2650/55, 1.2680, 1.2700/05, 1.2803, 1.2812 and 1.2820
Limit: 1.2700/05 and 1.2850

Technically, intraday indicator still has room for more upside. Price action is still on a healthy gradient with momentum still firming pointing higher. The rally in the EURAUD has the characteristic of a reversal at the early stage i.e. powerful. This supports the view that E$ should have more mileage on the upside.
For today, expect market to consolidate within 1.2750/60 to 1.2800/10 before breaking higher for 1.2850/60. Risk to below 1.2715.
E$ Daily chart - Fibonacci retracement levels
USDCAD (Follow-up)
Now you are going to question why I am going short USDCAD when I see USD strength. Sometimes, I get the signals from my technical tools before I analyze the possible rationale. Admittedly, this trade is against the weekly trend but signal is strong.  The unwinding in the inter-commodity currencies (i.e. AUDCAD & NZDCAD) will put pressure on this pair for now. Bearish divergence and weak momentum support this view.
For today, 1.0050/60 should cap and I expect it to fall towards 0.9940/50. Watch the price action when it tests 0.9970/80.
$CAD Daily chart - Bearish divergence
This currency pair often acts as a confirmation of a change in the USD trend. Why? because it does not lead, it follows as the SGD is weighted against a basket of currencies of our trading partners and it reacts according to the relative value. Fundamentally, the Ministry of Trade & Industry (MTI) cut its 2012 GDP growth forecast to the low end of the estimate at 1.5% and forecast 2013 to be within 1-3%.
Technically, USDSGD has broken out of its consolidation and down trend line (see chart) and this has increased the probability of heading towards 1.2380 and then 1.2500 in the weeks ahead.

All the best and have a great weekend!!

Thursday, 15 November 2012

Tight range but still up....

Good afternoon folks! Had a good run? Something arose this morning and have to run out to get it settled. Received a great piece of news when my boy came back from school yesterday, he topped his primary 1 class in mathematics and did very well in other subjects too!!   :)

Ok, back to the market..... frankly, there wasn't any single piece of good news to justify the E$'s rally yesterday but it did. EURAUD rallied along as the A$ faltered. In my earlier post, I have mentioned that E$ may fall into the 1.26ish region as a target and we probably have seen it achieved that with the recent low of 1.2661. Just looking at the chart below, it is starting to show a possible bottom in the making after sessions of down move. The 100(brown)DMA seems to be supporting E$ and the probability of E$ rebounding to test the 200(blue)DMA at 1.2800/10 is high for now.

Order book: Updated1
Stop loss: 1.2650/55, 1.2680, 1.2700/05, 1.2800 and 1.2850
Limit: 1.2620/30, 1.2800 and 1.2850

Technically, intraday indicator is only around the 60% mark and there is enough scope for the E$ to push further. Intraday momentum remains firm and still pointing up. As we are still in the daily cloud, expect choppy price action.
For today, on a more conservative side, the trading trade is from 1.2700/10 to 1.2765/75 (first resistance) and then 1.2800/10. I still prefer to be on the long side until closer to the resistance.

All the best! Will update again if I see any other opportunities on other currency pairs.
E$ Daily chart - 21(Red), 100(Brown) & 200(Blue) DMAs
USDCAD (1.0013)
This currency pair looks heavy and should drift to first support 0.9960/70 and then 0.9940/50. Risk above 1.0040.

Wednesday, 14 November 2012

Risk on!!!

Good afternoon folks!

Market rumour that funds will be released to Greece encouraged short covering in E$ to 1.2728 last night during the NY session. However, when no confirmation was received subsequently, market sold the E$ back down to 1.267ish only to be met with bids and it rebounded above 1.2700 to close at 1.2703. So far, most of the sell stops sub-1.2700 have been flushed and it seems like market is caught short E$ following a week of negative sentiment.

Notable orders:
Stop loss: < 1.2700
Limit: 1.2600/08 and 1.2620/30

Technically, short term intraday indicator is at o/b levels and market would consolidate lower from here at 1.2720. But overall intraday momentum has turned higher which has increased the probability of a near term bottom. This is further strengthened by the long-legged doji formation yesterday, following days of decline, which also increased the probability of a possible near term reversal. This would encourage a mean reversion to the 200DMA (Blue).
For today, expected range 1.2680/90 to 1.2790/810. I look to buy dip with risk below 1.2630.
E$ Daily chart - Retesting the 200 DMA (Blue)
I have been monitoring this pair and recent price action has suggest a near term bottom been formed and strong upside momentum further confirmed by the RSI. Range may not be wide but quite manageable in terms of risk/reward. Look to buy dips. Support 65.15/25 and resistance 65.60/65 and 65.80/85

SGDJPY - Daily chart with 21DMA (Red) and RSI

Tuesday, 13 November 2012

Range tightens....

Good morning and happy Diwali to my Hindu friends! Its a public holiday here in Singapore.

Nothing concrete came out of the Eurogroup meeting yesterday which did not surprise many.
Order book is getting thin again with notable limit orders at 1.2620/30 and 1.2800/10. Stop loss orders were heard building up since yesterday at 1.2680/85.
Technically, E$'s inability to push higher and the consolidative price action has turned intraday momentum back down again. Though intraday indicator is nearing o/s levels but there is scope for some more downside.
Expected range for today: 1.2640/50 to 1.2720/30 with risk to 1.2745.

E$ Weekly chart - Caught in between 21 (red) and 50 (green) WMAs
Expect further consolidation within 79.30 to 79.60/70. But USDJPY needs to re-capture and stay back above the 21 (red) and 200 (blue) DMAs to turn the picture bullish. Firm momentum, coupled with bullish divergence is supporting this currency pair but it would need to act fast before the upward momentum fizzles off. For today, I still prefer to buy the dip with risk to 79.00.
USDJPY Daily chart - Still staying below MAs

Monday, 12 November 2012

Day of rebounds...

Gooood Monday morning folks! Happy Veterans Day to our American friends!!

Last Friday saw the bears won the tug-of-war briefly by pushing E$ below 1.2700, tripping large stop loss orders to 1.2689 low before a mild rebound to hover around 1.2710/20. I have connected a few previous lows and highs to form a band (around 1.262ish to 1.269ish). Purpose of doing this is to show previous market reactions when close to these levels i.e. it is often rejected on first test. The large limit orders seem to reflect support this observation.

Notable orders just updated this morning:
Stop loss: 1.2690/00 and 1.2800-20
Limit: 1.2600/20, 1.2650/55 and 1.2700/05

As today is a U.S. federal holiday, I am not expecting a big trading range but instead a market consolidation of recent move.

Technically, intraday o/s environment, coupled with bullish divergence signal and weakening downside momentum would encourage short covering. Expected range 1.2680/00 to 1.2800/20.
E$ Daily chart - MAs cutting down and the band 

This currency pair having fallen for the past few trading days should find reprieve today as technical indicators show signs of near term bottoming. A long-legged Doji (following several down sessions) , weakening downside momentum and bullish divergence signals have all increased the probability of a rebound. Expected trading range 79.20/30 to 79.80/90.
USDJPY Daily chart - Long-legged Doji

Friday, 9 November 2012

Short covering

TGIF friends!

E$ fell to a new recent low of 1.2717 overnight tripping some stops at 1.2720 before Asian sovereign bids came in to support the pair. Short covering this morning took the pair to a high of 1.2783 as market unwinds from its o/s condition. To add, there is a bullish divergent signal which can indicate a near term bottom but still pre-mature to confirm. As we have moved into the "cloud" on a daily basis, this kind of choppy price action is something we must be prepared for. Currently, we should be trapped within 1.2810/20 to 1.2710/20 and market will be keen to retest the 200DMA (blue).

Order book is getting busy with the following:
Stop loss: 1.2700-05, 1.2710, 1.2805-15 and 1.2820-25
Limit: 1.2610-20, 1.2650-55 and 1.2820-25

E$ Daily chart - Retesting the 200DMA?

USDJPY (Y79.53): Recent rally to 80.67 was not sustainable as momentum fizzled, resulting in bearish divergence (see chart). This rejection above Y80 will continue to put pressure on this pair towards the 78.90/10 band in the near term with initial resistance at 79.60/70 (200DMA).

USDJPY Daily chart - 200DMA to cap

All the best and have a great weekend!

Thursday, 8 November 2012

More than a yard worth of E$ sold....

Good morning folks. Its the start of the Singapore Barclays Open!!!

Indeed, market whipsaw as expected within the defined range ("Patience..." 6 Nov Tue). First, it was the Obama victory rally to 1.2876 and then subsequently plummeted on the comment by Mario Draghi. Heard an investment bank sold more than a yard worth of E$ tripping stops down to 1.2736 low (see chart, Fibonacci 38.2% retracement level) only to be met with bids from Asian sovereign name and some corporate demand.

Yesterday's price action took many by surprise as it flushed stops either way and left many bruised. That set me thinking of the worst case or most vicious and frustrating scenario from here to mentally prepare myself in case it really materialize i.e. a sharp rally from here to break yesterday's high and rally towards 1.29ish before it falls all the way back to 1.26ish by next week. That will flush the stop loss orders residing around the 1.2885 and 1.2890/00 area first.

This morning, Australia once again surprised market on the upside with its much stronger set of employment number of +10.7k jobs and rate at 5.4% vs expectation of +0.2K and 5.5% respectively. Obviously it sent the A$ flying and that supported E$ but with EURAUD lower.

Market focus is now turned to China's power transfer (but that should not have any surprises) and the woes in Europe (which market has reacted and built in the negatives for now).

Technically, bullish divergence has emerged and E$ does look like it has formed a temporary base at 1.2730/40 for a rebound to 1.2820/30 (first resistance). If the above scenario pans out, 1.2950/60 may be the ultimate target on the top end. Bearing in mind that on a weekly basis, the E$ remains bearish for 1.2610/50. Though there is 2 way opportunities, but for the conservatives, fading the rally above 1.2900 would appeal.

All the best!!
E$ 8-hourly chart - Initial bounce off 38.2%

Wednesday, 7 November 2012

Longer QE!!

Okay, we now have the U.S. election behind us and Ben Bernanke is very likely to remain as the chief of Fed. No major changes as far as policies is concerned for the financial markets in the near term horizon. For now, President Obama had better get as much of his well deserved sleep because in the days ahead, his next challenge is to work with the Republican camp to quickly come out with solutions to avert the fiscal cliff come end of this year.

As expected, E$ reacted positively to the result and spiked higher to touch high of 1.2876 when the result was announced. Of course in hindsight, market has already factored in an Obama victory yesterday by buying up risky assets and E$ closed with a tweezer pattern (circled).

Meantime, let the market celebrate "for longer QE" before the attention is swung back to the problems in Europe.

Order book is starting to get busy again:
Stop loss: 1.2740, 1.2885 and 1.2890/00
Limit: 1.2750/60

Technically, intraday indicator and momentum have all turned higher increasing the probability of a near term bottom being formed. The short covering may take us back to the 1.2950/70 region to retest the trend line but I remain skeptical that E$ can sustain this rally as the weekly chart remains bearish for now. EURAUD continue to look heavy as market switched to risk loving mode. I still maintain the wide range I mentioned yesterday, which is 1.2600/50 to 1.2960/80. We are stucked just below first resistance at 1.2870/80 for now. For today, I prefer to be fading into rallies but would stay patient for now. 

All the best!
E$ Daily chart - Retesting trend line

Tuesday, 6 November 2012


Good afternoon, folks!

You mean you guys are planning to trade today? My advise is to stay out and try not to pre-empt the market reaction to the election result.
Clearly, most participants are already out of the market. It is evident in the order book. I have hardly seen it as bare as it is now.

Technically, bullish divergence signal has emerged and that has increased the probability that E$ might have found a temporary bottom for now. E$ is currently staying below the 200DMA and 50WMA and the weekly trend has turned bearish. A falling EURAUD is also adding pressure on E$. As I have mentioned yesterday, market has moved in such a way that it has left room for a short squeeze but within a near term downtrend.
A potential range which I think market may whipsaw within for the next 48 hours... 1.2600/50 to 1.2960/80 on wide on first test.

All the best!
E$ Weekly chart - Fibonacci levels at a glance (21WMA - Red, 50WMA - Green)
DMA = Daily Moving Average
WMA & MMA = .........

Monday, 5 November 2012

What a week!!

Good Monday morning folks!! I would like to take this opportunity to congratulate Kimi (my favorite driver) for his first win since his return to F1 just this season!

This week.... will be one heck of a week with the U.S. election tomorrow, the Chinese leadership transition and the Barclays Singapore Open taking place from Thursday!!
So let's focus on the U.S. first.... by the way, how many of you are guilty of not knowing the meaning of "fiscal cliff"? Here's a little help... it is a popular shorthand term to describe the conundrum that the U.S. government will face at the end of 2012, when the terms of the Budget Control Act of 2011 are scheduled to go into effect. You can read more on the terms here at

Last Friday was a disappointment as I was expecting a bounce before the sell-off but it did not materialize after it fell through the support. Am glad I had a tight stop placed.
For today, I have to warn that market can be choppy but pressure is on the E$ at this stage basing on the weak close last Friday and for the week. However, there is a risk of an intial mild short squeeze before it resumes its slide.

Most of the sell stop loss orders had been flushed last Friday and we are nearing the previous low of 1.28034. I have no updates on the latest orders but from last, noteworthy limit orders can be found at 1.2780 and 1.2800/05.

CFTC speculator accounts revealed that E$ net short has increased to -58,207 vs -55,219 and net short JPY jumped to -37,020vs -18,196.

Technically, intraday indicator is in the o/s zone and intraday momentum is starting to turn higher. Initial support at 1.2800/05 should hold for now and a rebound to 1.2870/90 is expected during the Asian to early European session. There is a small possibility of market squeezing up to 1.2960/70 but will be keen to fade into this rally for 1.2800 to be retested. General trend for the week basing on the available technical signals is down but remember that this week can be more fundamentally driven. So be prepared for a choppy market and advise all to have stops in place and stay very nimble.

All the best and have a great week ahead!!

E$ Weekly chart - Mean reversion to 21WMA? 

Friday, 2 November 2012

Gearing for election....

TGIF!! I will be watching "Skyfall" when U.S. announces their employment numbers today at 2030hr (Sin/HK). Remember what I have mentioned before ("Trapped again...." 31Oct) on how the market's potential knee-jerk reaction?

Asian sovereign interest was heard at around 1.2920/30 yesterday and that supported the rebound to 1.2982 in the NY session. I don't think it was a structural play but more of an opportunistic move. Though price stayed range bound, it has slipped below the trend line again and this has given the bears an advantage for now. Cross referencing the daily chart of EURAUD, this currency pair has already stayed below the 50DMA and this further add weight on euro. Though on the weekly chart, E$ continues to stay bullish but like I have mentioned, recent price action has positioned itself for a possibility for a break for 1.26ish. The U.S. election, major risk event, will dictate the short term move of currencies.

Latest order book update revealed the following:
Stop loss: 1.2840, 1.2860-80, 1.2920/25, 1.2985/90 and 1.3010/25
Limit: 1.2880/85, 1.2920/25 and 1.3010/25
But it is starting to become a bit more lopsided after E$ has been rejected a couple of times below 1.3000.

Technically, intraday indicator is in o/s zone though not extreme but would have increased the probability of a rebound upon any sell-off here. Market is caught between the 21DMA (red - 1.2973) and 50DMA (green - 1.2885) and this should dictate the range for today. Momentum continues to point towards range consolidation and guess this will probably be the way into the election next week.
For today, I see 2-ways trading opportunity. From Asian to European session, trade 1.2910/20 to 1.2970/80 range on first test. From late European to NY session, 1.2970/80 to 1.2880/90.

Expect market liquidity to be sub-optimal and therefore characterized by whipsaw price action, so stay nimble and have a trailing stop to protect your profit. All the best and have a great weekend!
E$ Daily chart - Still trapped in between 2 DMA

Thursday, 1 November 2012

No show hand....

Good morning, folks! Hope all enjoyed the Halloween celebration last night. Anyone can tell me who will be the happiest group of people after the trick or treat (mainly treat!)? Nope, not the kids.... (answer below the chart).

Once again, the market refused to show its side the obvious manner. It closed an inverted hammer and below the 21DMA (red) following a Tuesday's bullish piercing pattern and this should put initial pressure on the E$. However, the underlying bullish tone is garnering more support technically by the day:

  • Price staying above the 50DMA (green) and lower trend line. 
  • 50DMA has also cut above the 200DMA (blue) last Friday. 
  • Daily and weekly momentum are also pointing higher 
Do note that an inverted hammer is NOT a reversal signal. However, it is an indication that the bears had an upper hand towards the closing. 

Order book from last evening:
Stop loss: 1.2850, 1.2870, 1.2880/85, 1.2970 and 1.3020/25
Limit: 1.2880/85, 1.2910/25 and 1.3020/25

Technically, another day with a mixed bag of signals:
  • Bullish divergence has emerged in the intraday momentum and this should provide support amid a mildly o/s condition. 
  • Stops at 1.2970 will attract attention but initial resistance at 1.2980/90 should cap for now.
  • Notable buyers and sellers defined the range of 1.2880/90 to 1.3020/30 for now with intraday momentum supporting a consolidation mode.
I would trade the defined range but prefer to buy on dip for today and will patiently wait for market to test the 1.2890/1.2910 and look to take profit around 1.2970/80. 

All the best and stay nimble as we approach the apex of this consolidation.

E$ Daily chart - Bulls still have upper hand
(the dentists!!)