Do you know that yesterday was full moon and +/- 2 days, we are technically within the "zone" till Tuesday? Coincidentally, the major risk events are the result of the Italian election today and Fed Chairman Bernanke's testimony on Tuesday.
As far as the E$ is concerned, the bears will continue to be in control unless the bulls are able to first take price back above the trend line (1.3235) that it broke below, by this week. Another good tell-tale sign will be the February's monthly close this coming Thursday where a close above 1.3380 will alleviate the bearish pressure for March. However, a close below will increase the probability of market probing lower towards 1.29ish.
As far as today is concerned, we cannot ignore the major risk event as it can overwhelm any technical readings. I will present 2 scenarios in reaction to the Italian election result later:
Scenario 1:
Berlusconi did not win: E$ positive, 1.3146 would become near term bottom for market to challenge 1.3350/80 pivot level.
Scenario 2:
Berlusconi wins: E$ takes a dive towards 1.3100/20 but rebound and stays rangebound under 1.32350/40 and await Bernanke tomorrow.
CFTC COT report: Speculative accounts further reduced their euro net long positions to +19,103 vs +24,181 last week. Net short JPY position increased to -65,891 vs -61,306.
Asian order book across the market:
Stop loss: 1.3130, 1.3150, 1.3260 and 1.3300/10
Limit: 1.3150 and 1.3245/55
Technically, market is recovering from its o/s levels with shorter intraday momentum turning higher supported by bullish divergent signal. However, longer intraday momentum is still pointing down as of now. For today, basing on the above 2 scenarios, the expanded range would be 1.3100/20 to 1.3330/50. Be disciplined and stay nimble!
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| E$ Weekly chart - Bears in control unless bulls regain above trend line |
EURAUD
As promised on "Euro bash!" (21 Feb), here's the follow-up on the micro of this EURxxx pair. Last week, market sold it down to 1.2744 low and it rebound as bullish divergent signal emerged and is currently staying above 1.2800. There are technical signals to indicate that recent sell-off could have completed and it due for its next leg higher. However, we still cannot ignore the 2 major risk events which can still inject volatility ahead of the month end close on Thursday but 1.2750/60 must hold. The first sign of danger for the bears will be a daily close today above 1.2840/50. The next stronger pivot level will be 1.2970/80. A monthly close above that level can springboard rate to 1.3500 in the months ahead.
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| EURAUD Monthly chart - Retested MMA21 at 1.2760 and held |
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