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.
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| 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.
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| USDJPY Monthly chart - Break out and up |
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