Flying into the danger zone....

Having witnessed how the markets reacted to both versions of his take on QE in recent weeks, I am quite sure Bernanke would during his Humphrey Hawkins testimony deliver a message where the possible outcome will be one where he won't get himself buried by more interest payment burden. Smart choice of the sequence I must say, if it was intentional. That being said, if his message for these 2 nights at 10:00pm (Sin/HK) is going to be consistent with the latter, it will support a USD negative environment, at least in the near term after some initial vicious whipsaw.

With the main fundamental focus for the next 2 days being a pure USD against the rest of the world, E$ will somehow slip into a zombie state (look at the order book!!!) Like I have always likened E$ being caught in between 2 tectonic plates as she slips into her quasi USD role. But do not get overly bullish at current levels as we are trading around the upper band of the defined range (see chart 1). Expected range 1.3070/90 to 1.3180/200. Would prefer to trade from the short side if I have to.

USDJPY presents another direct USD play as trend indicator suggest this pair is ripe for a reversal as supported by the dark cloud cover weekly candlestick pattern. However, how deep the "B" wave can extend (see chart 2) really depends on the guidance by Bernanke. I look to fade into rallies but mentally prepared for Scenario 2. Expected trading range 97.50/70 to 99.60/80 (expanded 100.60/80). Watch support at 98.00/10.

However, if you insist on trading but hope to insulate yourself from the direct impact (kind of) from the Bernanke related volatility, one can dabble into AUDNZD where I would attempt to buy on dips. Expected trading range 1.1660/80 to 1.1810/30 (watch first resistance at 1.1740/60)

European order book:
E$
Stop loss: 1.3050/40 and 1.3170/80
Limit: 1.3170-90 and 1.3250/60
$JPY
Stop loss: 98.10/00, 100.05/10, 100.20/30, 100.45/50 and 100.90/00
Limit: 98.10.00, 100.05/10, 100.45/50, 100.75/80, 100.90/00 and 101.20

E$
Primary trend: Bullish
Intermediate trend: Range between 1.2800 to 1.3250 before 1.2400
Minor trend: Mixed with limited upside to 1.3200/50

E$ Daily chart - Right there at the upper band.....

USDJPY 8-hourly chart - How deep will this "B" wave be?