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
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| 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).
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| USDJPY Daily chart - 200DMA to cap |
All the best and have a great weekend!
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