Market opened with a massive 120+ pips lower following the news out of Cyprus over the weekend. The bears have exerted their authority as it took E$ back inside the channel after its attempt at the pivot of 1.3120/30 was thwarted on Friday. It managed to touch 1.31078 high before closing the week at 1.30739, which was above the trendline though. As mentioned in "3 more signals to cancel out...., 15 Mar", Friday's close only managed to cancel out 1 bear signal which has yet to turn the tide around. Prudence must prevail as the overwhelming fundamental has disrupted the natural rhythm of the market and at this moment will be hyper-sensitive to any news out of the eurozone. Many will be keen to see how market is going to react to cover the gap. If anything, bears are still in control until the pivot level is re-captured. Next focus will be the Fed rate decision and FOMC statement out on Wednesday (Thu, 2/2.30am Sin/HK).
CFTC COT report revealed that speculative accounts have reduced their net euro short position marginally to -24,787 vs -26,116. Net jpy short position increased further to -93,763 vs -73,351.
Technically, intraday indicators are all in o/s territory (obviously) and the current consolidation is unwinding that condition. Downward momentum is strong and the daily indicator is starting to turn back lower again. At the moment, I would prefer to step aside and observe the price actions before formulating a trading plan. Support at 1.2860/80 and resistance 1.2990/300.
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| E$ Weekly chart - 50% achieved, 61.8% next? |
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