E$ consolidated pretty much within 1.3000 to 1.3100 during the Asian/European session as Asian sovereign demand held 1.3010 and market chatters of LHS interest for the European fixing capped the topside. It subsequently broke higher taking out stop loss orders around 1.3100 and then printed a high of 1.3140 this morning before easing off to current level. I would expect further softening to first stronger support at 1.3085/95 and then potentially lower towards 1.3040/60. I would take at least half of the profit at the first support and stay nimble for the balance watching for next support. I will be mentally prepared for another spike towards 1.3160/80. If this materializes during the European session (before 1.3080/90 is seen), it will be tempting to fade into the rally. But if it happens during late NY session, one would have to be cautious as it has a higher probability of closing firm for the day, which is a short term bullish signal.
Meantime, I am watching the daily momentum unfold as I see 2 potential scenarios:
1. E$ failing below 1.3140/50 and fall towards 1.2930/40 where it holds and market rebound towards 1.3200
2. E$ falling back to 1.3040/60 and rebound towards 1.3200
Either way in the near term, I see a possible rebound to 1.3200 first before a drop towards 1.2600/2700 in the months ahead. However, from then on, it could be sunshine for E$ as I see a turnaround rally into 1.3800/4000 towards end of the year. Trust me, I am more interested in the day to day move too! :)
Order book during the Asian session:
Stop loss: 1.2995-80 & 1.3160
Limit: 1.2950, 1.3010/00 (opt) & 1.3025 (opt)
*opt = large option expiry
For today, market is unwinding the o/b condition as momentum on the upside has waned with bearish divergence signal. Expect E$ to fall back and consolidate within new range of 1.3040/60 to 1.3140/60.
All the best!
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| E$ 8hourly chart - 61.8% correction ratio stands at 1.3184 |
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