Friday, 28 December 2012

No update today due to technical prob

Apologies. Having problems with my fibre optic network and hopefully can be resolved by this weekend.
All the best.

Thursday, 27 December 2012


Hi folks!!

Market will remain listless till it gets direction from the US fiscal cliff talk probably starting today as President Obama cut short his holiday in Hawaii to rush back on Wednesday, indicated the urgency.

As expected, E$ stayed within the range during the past 2 days as forecast in my last blog "Bears to pull the sleigh for now" and I am not expecting it to deviate from 1.3150/60 to 1.3250/60 for now until new fundamental input.
Trend remains up for E$, supported by EURJPY, but at current price level at this moment, after the recent rally, makes it susceptible to negative news. A short term correction if it materializes, can go as deep as 1.2940/50.

For today, short term intraday indicator is close to o/b level and that supports the range trade view. However, with price holding near the higher band of range over the past 24hrs, intraday momentum has gradually shifted from consolidation to slight upside bias.
For today, I do not encourage position taking as market has switched to more of a fundamentally driven market. Liquidity is sub-optimal and that makes it even more unreliable for technical analysis.  Probability has dropped to 50/50, however, it is still better than casino probability because house always has average edge of 1+% over player.
E$ Daily chart
Now that my target of Y85 has been reached (read blogs dated 23/26 Nov 12), let's update the forecast for the next phase.
From the monthly chart, one can "feel" the possibility of a reversal in major trend for the $JPY. After spending 3 years (from 2009 to 2011) of probing lower amid fading momentum, the market finally rebound after hitting a low of Y75.30 on the 31 Oct 2011, before BOJ's massive intervention. These past 2 months's price action supported by firm momentum has clearly turned things around quite a bit. Though daily and weekly indicators are in extreme o/b levels, one has to be aware that in a major trend reversal, indicators can get "stucked" as price continues to punch higher. Based on time and price, $JPY remains susceptible to negative news at current levels. Y83.80/84.00 provides good support for now with next target at Y89/90 in the coming months.
$JPY Month chart - 

Monday, 24 December 2012

Christmas Special..... Bears to pull the sleigh for now

Gooood Monday morning folks, its Christmas Eve!!!! Let's face it, all you diehard traders.... you should take a break today considering the fact that Japan and Germany are out (US half day) and tomorrow is Christmas Day with most of the world out. So one can imagine the liquidity condition. Even my regular 0.4pip spread in E$ is flipping to 0.6/0.8pip now and then.

For my American friends, its Cliffmas week. But let us all worry about that from Thursday onwards. Undoubtedly, it will be the main fundamental driver for the market to close the year.

For today, o/s intraday indicator should provide some form of a support for now with intraday momentum turning from down to consolidation/up. This blends in well with the current environment where there is basically no economic data releases worldwide. Attention seeking politicians or central bankers will probably keep their mouth shut as no one will appreciate their view ahead of Christmas. Expected range between 1.3150/60 to 1.3250/60.

Chart 1
Last week, E$ closed a Shooting Star candlestick pattern and this should put pressure on the 1.3144 support level (do note that the Shooting Star pattern is not always a bearish signal and it must not be read in isolation). Amid an illiquid environment, one must be mentally prepared that E$ may fall sharply to the 1.3030/40 zone (yellow line) or even retest 1.2940/50 (level for this week), the falling trend line it broke above 3 weeks ago, on any negative outcome from the fiscal cliff talk. That being said, one would have noticed I used the word "retest". The fact is, E$ has already broken higher supported by firmer momentum. Therefore, any quick sell-off should be viewed as opportunity to buy cheaper E$ rather than to switch to a trend change mentality. By the way, let me explain the significance of the yellow line. Looking at where the line cuts through 2012, one would have noticed that this band has been kind of a pivot and E$ has successfully re-captured and closed 2 consecutive weeks above.
Chart1: E$ Weekly
Chart 2
As a day trader, it is still important to be aware of the longer term trend. In the monthly chart, one would have quickly noticed E$ bouncing off the MA200 twice. This year, the low established was 1.2042 before rebounding closer to the 2012 high so far at 1.3486. If E$ was to fall back to around 1.2940/50, as mentioned above, to close for the year, we would have formed a Doji pattern as we started 2012 at 1.2931. A Doji candlestick pattern at the lower range could be a bullish signal for E$ in 2013. Another bullish supporting signal is the fact that price has re-captured the rising trend line (circled). Main obstacle right now are the bunch of moving averages around 1.34/3500 band. Clearing that hurdle will open up 1.4ish in the new year.
Chart 2: E$ Monthly - MA21 (Red), MA50 (Green), MA100 (Brown), MA200 (Blue)
Let me take this opportunity to wish all my friends a Blessed Christmas!!

Friday, 21 December 2012

Tweezer top

Sorry folks, crashed out after taking my medication this morning and had to forego my afternoon 18-holes :(   Still suffering from jetlag and fever since I returned, but managed to wake up alive past the Mayan 21/12/12 deadline  :)

Last night, market short squeezed E$ to the high of 1.3295 but failed to break previous high of 1.3308 (hmmm, smells fishy again with the 8!). The subsequent steep sell-off formed the tweezer formation which in simplistic term is called the "double-top". As mentioned yesterday, market may not be too keen to take this pair higher into the resistance zone without a sign of optimism out of the US for now. Do take note that liquidity is sub-optimal at this time of the year and spikes/gapping can be quite common.

Order is getting quite busy...
Limit: 1.3115/25, 1.3255/65 and 1.3300/10
Stop loss: 1.3140/50, 1.3170, 1.3320 and 1.3350
Heard the Asian sovereign bid interest at 1.3140/50 has been pulled out.

Technically, almost identical pattern as yesterday with the shorter term intraday momentum indicating consolidation with an upside bias but the longer term intraday momentum suggesting more room on the downside. With the tweezer formation, pressure will continue to be on the E$ to test lower.
For today and possibly over to next Monday, I expect an up>down market with E$ testing 1.3260/80 on the upside before falling back to 1.3120/30.

All the best and have a great weekend!! I feel warmed up already and will share an update on USDJPY next week following my 23/26 November blogs ("8=Prosperity" and "E$ Bulls edged the Bears" respectively).
E$ 8 Hourly chart - Tweezer top formation

Thursday, 20 December 2012

Shooting star!

Good morning folks! Hope everyone had a great time trading in the past 3 weeks.

Just to share my observation from my holiday in the West Coast of USA. I am sure tourists are pouring to the country as the U$ is relatively weaker and this gives them more spending power. Just my friends alone, I know of about 6 families who have chosen West Coast as their year end vacation choice! Car rental and food are way cheaper than Europe. Gasoline price is surprisingly high though still cheaper than Europe and Singapore. One thing for sure, the service level has gone noticeably higher and I find Americans very helpful and generally friendly. I noted improvement in infrastructure like the roads. By the way, the Las Vegas strip is phenomenal! Lastly, I notice advertisements of easier credit to consumers (the QE is working!!).

Back to the market.... E$ was enjoying a great run, touching the high 1.3308 last night until news of stalled fiscal cliff talk between President Obama and the Republicans hit the market, sending E$ to close all the way near to the day's low near to where it opened. This reaction formed a shooting start formation in the candlestick pattern and is a short term bearish signal, which the spillover momentum depress E$ to 1.3189 low this morning. Yesterday's reaction to negative news is not totally unexpected considering how much it had run up recently and coming close to major resistance levels (around the 1.3400 level) would trigger some profit taking interest.

Latest update on the order book revealed the following:
Limit: 1.3140/50 and 1.3350
Stop Loss: 1.3140, 1.3310 and 1.3350

Technically, short term intraday indicator has bounced off o/s levels though longer term still has more room on the downside. Shorter intraday momentum suggest consolidation with upside bias but longer term momentum suggest consolidation to down.In summary, I expect some uptick from here but E$ may subsequently turn lower again. Expected range 1.3130/40 to 1.3250/60.

All the best.
E$ Daily chart - Shooting star formation