Spillover momentum from last week took E$ to a high of 1.3068 before easing off to low of 1.3005 and consolidating around current levels. However, today's spike higher was not supported by strong enough momentum resulting in a first sign of technical weakness - bearish divergence. It may still be premature to determine that E$ has seen its near term top and will need more signals to confirm. Meantime, I maintain initial target of 1.3130/40 before a deeper correction, potentially back below 1.2900. Fundamentally, Wednesday's FOMC minutes could be a trigger to stop E$'s recent rally in its path. This can be followed up by market switching attention to any new negative development out of the eurozone toward the later part of the week.
Primary trend: Bullish
Intermediate trend: Bullish
Minor trend: Up / Down (toppish nearer 1.3130/40)
European order book: (stop orders are building up on either end and starting to get interesting)
Stop loss: 1.2890, 1.2940, 1.2995/90, 1.3070/80 and 1.3130
Limit: 1.2900, 1.3070/80 and 1.3100/15
Technically, intraday indicator is near o/b condition. Shorter intraday oscillator indicators are staring to turn lower which suggest range consolidation. Longer intraday momentum is still pointing higher though. For today, I expect range between 1.2970/80 (on first test) to 1.3080/1.3100 (expanded 1.3130/40, where I will be keen to fade into with a stop above 1.3180).
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| E$ 4-hourly chart - Bearish divergence, first sign of weakness |
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