E$ fulfilled the forecasted normal range as outlined in "Testing channel resistance.... (Update1), 7 Mar 13". E$ shorts scrambled to shortcover overnight when ECB stayed pat on interest rate, followed by mildly hawkish comments (relative to recent developments in Europe) during the conference. Clearly, 1.2940/50 level has formed a solid base for this currency to propel higher, printed high of 1.31181 and closed above 1.3100 at 1.31053. The price action yesterday has triggered signals that we have not witnessed since E$ descended from the recent high of 1.37106. The obvious one being a bullish engulfing candlestick pattern which is a strong reversal signal. The daily bullish divergence, coupled with firming intraday momentum have increased that probability to a significant degree. However, in all things, further confirmation like recapturing with a daily or weekly close above the pivot at 1.3120/30 will a good signal that the bulls have taken charged. Next important level to watch will be 1.3170/90 (trendline resistance today). US employment numbers tonight will be the impetus. Let's see if the market what to divulge more by its weekly close.
Update1:
Market order book
Stop loss: 1.2950 and 1.3128
Limit: 1.2950, 1.3160/65 and 1.3195/00
Technically, intraday indicators are now coming out of its o/b levels as market starts to consolidate with downside bias as upside momentum wanes after failing to clear resistance at 1.3120/30 overnight. However, longer intraday momentum has turned up coinciding with a possible trend reversal indicator signal. I expect E$ to drift lower with support around 1.3050/70 (stronger at 1.3020/30) into the London session. 1.3120/30 remains as initial resistance with a potential test of 1.3170/90 today during the NY session. I'll buy the dips limiting my risk to below 1.2940. For the data tonight, if it comes out within expectation, expected range 1.305/70 to 1.3170/90. Otherwise, expanded range 1.3020/30 to 1.3170/90.
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| E$ Daily chart - Bullish Engulfing pattern |
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