Good afternoon friends!!
E$ gave back more than half of its gains from the rebound on Tuesday as market became cautious going into ECB's meeting and the EU Economic Summit today. Unfortunately for the technical analyst, we must accept that today's price action will be dictated by the overwhelming fundamentals. I therefore have taken as much technical signals blending with either positive or negative news out of the meetings today to come out with these 2 broad scenarios for a 72-hours time frame. Ultimately, I continue to subscribe to buying on dip strategy but would split up the notional amount to even 3 portions.
Scenario 1:
E$ takes dip below Tuesday's low of 1.3458 but holds 1.3420/30 for a rebound to 1.3630/50. Thereafter to consolidate within for an eventual breakout on the upside for 1.3820/30.
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| E$ 4hourly chart - Scenario 1 |
Scenario 2:
E$ to hold firm into the news release and rally to retest the upside but cap around 1.3630/50 to plummet subsequently toward 1.3300/30 before it reverses to resume to the bull trend for 1.3820/30.
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| E$ 4hourly chart - Scenario 2 |
Nikkei 225 & USDJPY - The macro picture
Recently, a few of my friends have lots of interest in the Japanese market and so I thought would be opportune to share my technical view on the Nikkei 225 against the USDJPY trend. Many have asked, are we there yet? I sensed fear rather than euphoria. Therefore, in short, no I don't think we are there yet and I believe we are in an early stage of a medium term rally. Let's just take aim at the MMA100 (Brown) as the initial target for now. I will elaborate more and provide a micro picture in the days ahead.
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| Nikkei 225 Monthly chart - Stretched? think again |
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| USDJPY Monthly - Positive correlation |
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