Hope someone out here has already made the budget for the month :)
Indeed, round 2 unanimously went to the bulls as E$ staged a remarkable rally after holding 1.30366. The first powerful move came in reaction to ECB Mario's assessment of the eurozone's economic health as it surged to around 1.3210ish. The next wave then took E$ to a high of 1.3273. Market chatter has it that the second wave was attributed to some system guys who were caught really short and needed to cover their position before the end of the session.
Personally, I feel that a healthier and possibly more sustainable rally, based on time and price, would have been one that probably pause around 1.3200 last night and consolidate today for the next wave to around 1.3300 today. However, the characteristic of yesterday's parabolic rally gave hint of an intentional short squeeze. Looking back to the recent failed attempts at the 1.3300 region (see chart 1), it will be quite a challenge for the stretched E$ to sustain any gains above that zone for this round. However, E$ bears has to be cautious if it closes above 1.3300.
Not surprisingly, today's order book looks pretty empty:
Stop loss: 1.3160/50, 1.3245 and above 1.3300
Technically, longer intraday indicator remains at o/b level though shorter ones have unwound from the o/b condition. Shorter intraday momentum revealed bearish divergent signal which has increased the probability of a near term top in place. Meantime, due to the parabolic extension, I would expect a protracted consolidation with 1.3230/40 to provide short term support. On the topside, I will not discount a possible spike to test 1.3300 later today. Expected range 1.3210/20 to 1.3300/20.
Stay nimble ahead of the weekend :)
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| Chart 1: E$ 8hourly - Hi, bye area? |
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| Chart 2: E$ Monthly - Will Jan13 form another green candlestick? |
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