Watch EURAUD...

Happy Independence Day to my American friends. That will also imply sub-optimal liquidity during the Europe/NY session where ECB will make its Minimum Bid Rate announcement (7:45pm, Sin/HK) and Press Conference (8:30pm, Sin/HK).
Yesterday, E$ shortcovered as expected and it surged to a high of 1.3033 after touching a low of 1.2923. Rate has come off and currently consolidating around 1.2980/90. I have to admit that technical signals are mixed. While on one hand I see E$ testing 1.2800/50 and 1.3150/80, question here is the sequence. Looking at AUD$ (0.9105), I see a good chance of a rebound into 0.93ish and EURAUD (1.4265) falling back to test 1.40ish. For your information, for EURAUD to fall, the likelihood is for AUD$ to stay firmer, at least for this round. The bullish convergence in E$ continues to warn the bears, while the daily and weekly momentum indicators continue to point to lower rates. Looking at the order book, market does look like its caught short for now.

With this mixed view, I shall present a couple of scenarios here in order of probability:
Scenario 1: E$ holds 1.2923 and rally for 1.3150/80 before turning lower again for 1.2800/50.
Scenario 2: E$ drops on ECB' dovish comments to 1.2800/50 before rallying sharply for 1.3150/80 in the days ahead.

Europe order book:
Stop loss: 1.2905/00, 1.2930/20, 1.3050-55, 1.3070-80, 1.3100/10 and 1.3120
Limit: 1.2905/00, 1.2930/20, 1.3040/50 and 1.3070-80

Primary trend: Bullish
Intermediate trend: Range between 1.28 to 1.33
Minor trend: Mixed

E$ 4-Hourly chart - Bullish convergence keep bears cautious...