Fed in limelight tonight....

Yesterday's session appeared more like stop loss orders seek and flush mission than anything else as the Cyprus' consensus vote against the bank deposit levy was very much expected right from the start. The sell-off cleared several levels of sell stop orders till the lowest batch of noteworthy ones which resided at 1.2855-40 ("Main actor... Cyprus", 19 Mar). E$ touched low of 1.2843 before rebounding sharply to 1.2923. It then settled and consolidate around 1.2860/80 flirting the DMA200 before firming to current level. Despite closing below 1.2900, the daily oscillator is surprisingly indicating waning downward momentum. This environment will put E$ in a vulnerable position for short squeeze as the Europe order book is also starting to see a short side bias in the market. This is in no way hinting at a reversal of the intermediate but more of a turn in the minor trend. The pivot at 1.3120/30 is still the critical level.

Event risk is the Fed's rate decision / FOMC statement (2.00 / 2.30am Thu, Sin/HK) and this could the trigger for any shortcovering.

Primary trend: Bullish
Intermediate trend: Bearish for 1.2650/80 (Still within down channel, watch pivot at 1.3120/30)
Minor trend: Mixed (bullish divergence signals caution against getting overly bearish)

Europe order book across the market:
Stop loss: 1.2840, 1.3000/05, 1.3015 and 1.3040/50
Limit: 1.2960/70 and 1.2990/3000

Technically, intraday indicators are off the o/s levels. Intraday oscillator indicators are still pointing lower. However, the daily momentum is starting to turn from down to consolidation, which at current level would mean scope for more upside. In view of the event risk, will be mentally prepared for expanded range of 1.2830/40 to 1.3040/50 on first test.
Guide for tonight, trade in a smaller notional and try to scalp from extremes rather than mid-levels going into the announcement. Watch the short intraday oscillators for reversal signals when around boundaries for more precise entry level. Be nimble and don't forget your trailing stop.

E$ 8-hourly chart - Though downward momentum is waning but .....