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.
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| 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.
Follow-up
USDCAD
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.
USDSGD
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.
Follow-up
USDCAD
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.
USDSGD
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.
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