E$ continues its relentless push higher on the back of the firm close from last month. The next serious resistance is at around 1.3800/30 and it is only a matter when (I expect to see by Feb13) and not whether it will reach there. Price action has been constructive and momentum firm. In view of that, a sharp reversal is probably not imminent until at least after a parabolic rally. As long as many out there are still struggling to reconcile with euro's recent performance against its fundamentals, it will continue its march northwards. The easy money part is over and we should expect whipsaw intraday price action but building on higher lows and higher highs. For now at least, there is no reason to go against the trend but to embrace it.
London order book is looking quite busy:
Stop loss: 1.3485/80, 1.3515/490, 1.3535/30, 1.3570, 1.3650 and 1.3675/85
Limit: 1.3485/80, 1.3650 and 1.3675/85
Technically, shorter intraday indicators at o/b levels and a consolidation lower is needed to unwind. Longer intraday and daily momentum continue to point up which suggest that buying on dip is still the preferred strategy. A close today at around 1.3550-70 region would provide first sign of weakness and a close below 1.3540 would indicate a deeper correction towards 1.34ish. For today, I expect trading range within 1.3570 to 1.3660/70. In view of the important US employment data, an expanded range of 1.3520/30 to 1.3680/700.
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| E$ Monthly chart - 61.8% Fibonacci ratio @ 1.3830 |
Despite the bearish candlestick patterns, EURGBP held up very well and the correction was shallower than expected. Price action has turned around where risk/rewards does not favour selling anymore.
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