Round 3 - Bear's turn?

Good Monday morning, friends!!!

E$ disappointed again as it failed to make gains above 1.3400 last week despite the powerful rally the week before. If you have been following my updates, you would have sensed that though I am bullish E$ in 2013, I still expect it to test lower sub-1.3000 first before higher. I will be not surprised even if last November's low of 1.2662 be retested within Q2. So could the rejection last week be the start of this short term bear trend within a very bullish longer term trend? I will be watching for more telltale signs in the couple of weeks ahead to reinforce that view. In the meantime, whether you like it or not, there are some strong signals that the medium term USD bull trend has already started!!

CFTC's COT report revealed that speculative accounts have flipped back to holding net eur long position of +7,315 vs -8,035. It also reported net yen short of -65,727 vs prior week's -74,096. A quick analysis will show that market may be caught long euro which makes it susceptible to long liquidation, fitting in nicely with my view. As USDJPY touched Y90, it starts to draws in new USD shorts which probably explains the shift. But that would also imply that USDJPY may not have seen the high yet!

I will update the order book orders when I have them later. Just to share what I heard last week that there is a large 1.3000-1.3500 DNT (Double No Touch) option still in place. So one would expect lots of resistance nearer that level for now.

Technically for this week, a couple of observations to support a softer E$ have emerged.

1. Rejection at the 1.3400 level has formed in simplistic term, a double top (1.34038 / 1.3398)
2. Weak close last week at 1.3318 forming a bearish piercing candlestick pattern. As mentioned in "Lots of headwind...", 18 Jan Fri, this will put 1.3250/60 and 1.3200 back on the radar

As it is Martin Luther King Day, a national holiday in the USA, with very light economic data release worldwide, I expect market to trade within 1.3250/60 to 1.3380/90. This range will probably hold and tapers for a good part of the week with an eventual break of 1.3250/60 for 1.3200 in the later half.

Update1:
A very light Asian book with pretty much the same orders since last week:
Stop loss: 1.3405/10
Limit: 1.3260/50, 1.3400 and 1.3485/500

E$ Daily chart - Double top formation