Endorsing euro again!

Today is the last day of February and it will be enlightening to see where the E$ will close in NY. There is a high likelihood that February will close weak considering how much it had fallen but we can still gauge the level of bearishness basing on these probable closing levels and its implication for the month ahead. In case it exceeds my expectation, I shall update all again. Meantime, refer to the E$ monthly chart posted yesterday.

Closing level
Above 1.3375                                      - Likely to end up as Harami, a weaker bearish signal
Above 1.3180 but below 1.3375         - Dark Cloud Cover pattern, a bearish signal
Below 1.3180                                      - Bearish Engulfing pattern, a very bearish signal

Overnight, E$ managed to recapture the 1.3120/30 pivot level and that is the first important signal for the bears to sit up and pay attention to. That being said, it is way too premature to determine that as a reversal signal especially when we have a major risk event out of the US tomorrow.

In "E$ in the months ahead, 27 Feb", one would have gathered that I am looking for a couple of levels lower at 1.2880 and then 1.2690/700, which coincidentally are the 50% and 61.8% Fibonacci correction ratios. The likelihood of market testing 1.2880/900 is high but the probability of the next leg down to 1.2690/700 falls off quite significantly and will be contingent on how E$ close for Feb and its reaction to the outcome of the US budget problem.
Having said all these, I remain a euro bull (since 23 Feb 12, "Its my turn, said EUR" and reinforced again on 23 Aug, 12, "Happy days ahead for EUR?") and still maintain that 2013 will be a good year for the euro, including its crosses.

For today, intraday indicators are close to o/b levels though not extreme. Intraday oscillator indicators are pointing to range consolidation which at current level should have abit more headroom. But I do not foresee E$ being able to sustain up there for long and expect rate to fall back closer to the lower band of the day's expected range of 1.3110/20 to 1.3220/30.

E$ Daily chart - Recapturing DMA100 indicates strength?