Post-mortem
I always make it a point to perform one each time so I know where I went wrong. To be very honest, I ignored bullish signals on both Wednesday ("Rebound first?") and Friday ("LTRO dictates..."). Wednesday's signal was when the daily momentum turned from consolidation to potentially higher and on Friday, the longer intraday momentum has yet to show signs of waning. I was never very bearish the E$ especially when closer to 1.3200 and in fact got confirmation on a bullish trend on Friday!! Lastly, I forgot to factor in the full moon effect. What an irony, admittedly I was just too caught up with the 1.3240 large stop loss order that it clouded my judgement. Part and parcel of trading but we must get wiser! :)
This week will be event filled to ensure sufficient excitement. The major ones being FOMC meeting on Wednesday (Thursday 3:15am Sin/HK) and on Friday, the US employment figures at 9.30pm.
CFTC's COT report showed that speculative accounts increased their net long euro position to +21,381 contracts vs +7, 315 a week ago. Just for comparison, the all time largest net long positions stand at +119,538 and largest net short at -214,418 contracts. For the yen, spec accounts had a net short of -64,068 vs -65,727 contracts the week before.
Update1: Asian order book
Stop loss: 1.3240, 1.3265/60 and 1.3350/40
Limit: 1.3250, 1.3485 to 1.3500 (DNT) and 1.3550
Technically, the sideways consolidation has unwound the short term intraday indicator from o/b levels. Shorter intraday momentum has turned from up to consolidation whilst the longer intraday ones are still pointing up. Near term consolidation range to be confined to 1.3420/30 to 1.3480/90 probably into Ldn/NY. Subsequent breakout either side should see expanded range hold at 1.3370/80 to 1.3530/40. At this stage of the week, I see a 60/40 chance of market breaking lower first before challenging the high again from mid of the week. Bearing in mind that E$ broke out of a very elaborate consolidation, so one should expect further upside probe for at least this week.
2012's high is at 1.34866
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| E$ Monthly chart - MMA50 (Green) 1.3515 / MMA100 (Brown) 1.3440 and Fibonacci Ratio levels |
Update1: USDJPY
Following my update on last Thursday (24 Jan), I see USDJPY power higher towards Y93 and it seems like we may see that level sooner than expected. But we must not forget the bearish divergence signal that has emerged. Looking at the price action in the past 3 to 4 weeks, we are probably coming to the near term last stage of this powerful rally. Knowing USDJPY, it will not turn around without a runaway parabolic rally and very potentially reversing to close lower. Expected range Y89.60/80 (first test before Y92.50/93.00 is seen) to 93.00 and be mentally prepared for overshooting to Y94. Thereafter, I would expect USDJPY to stall and correct back towards Y89.00 in February. A breach of Y88.00 is a good indication of short term weakness. Having said that, I maintain a bullish medium/long term outlook to Y100/105 within 2013 to early 2014.
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| USDJPY Weekly chart - Stretched Time and Price |
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