Friday, 30 August 2013

Liquidity is back!!

Next Monday is Labor Day in the US and it marks the unofficial end to summer. Not coincidentally, it also implies a return of liquidity to normality which we have already noticed in the past couple of trading sessions.
Just take note that today is the last day of August and month end flows can disrupt the regular rhythm of the market.
Quite a good spread of data to keep the market engaged (All in Sin/HK time)
1400hrs  German Retail Sales
1600hrs  Italian Employment data
1700hrs  Eurozone CPI Flash Estimate + Unemployment rate
2030hrs  US Core PCE Price Index
2145hrs  Chicago PMI
2155hrs  Revised UoM Consumer Sentiment

CFTC COT report: Speculator's accounts
               31 Jul             6 Aug            13 Aug          20 Aug
EUR      - 8,504           + 6,061          +16,057         +36,746
AUD     -72,573          -76,779           -62,721          -63,183
JPY       -82,135          -80,213           -74,462          -71,721
Not surprised by the turnaround in E$ when spec accounts have such a directional bias.

NY order book:
Stop loss: 1.3185/80, 1.3205/00, 1.3300, 1.3345/55 and 1.3395/405
Limit: 1.3185/80, 1.3205/00 and 1.3395/405

Primary trend: Bullish
Intermediate trend: Bearish
Minor trend: Consolidation with upside bias

Technically, the downside easy money is probably over for now. Shorter intraday indicator is getting close to o/b but longer intraday is at o/s levels. Shorter intraday momentum is starting to indicate waning downside momentum whereas the longer ones are still pointing lower. Taking other technical readings into consideration, the most likely outcome: a potential test at yesterday's low of 1.3219 but 1.3180/90 should hold for rebound.
Based on current development, E$'s 1/2 weeks technical picture remains bearish for 1.3100 but for today, one should not get overly bearish when closer to 1.3200.
With this scenario, one can attempt a speculative buy dip with tight stop below 1.3150 on first test (before 1.3300 is seen). Sell rally can probably be held back till next week.

E$ Monthly chart - 2 possible Intermediate trend

Monday, 12 August 2013

USD has run its course?

Back after a short break and here's what I see unfolding:
1. These recent months of USD bull run is probably at its tail end or already run its course.
2. Euro, the quasi-USD, may soon feel the pressure as EURxxx start to correct the recent months of bull run.
3. If a major reversal is imminent, how does that correlate with the equity markets?

CFTC COT report: Speculator accounts as of 6 Aug 13
EUR:  -  8,504 vs  + 6,061
AUD: -72,573 vs   -67,797
JPY:   -82,135 vs   -80,213
Note: EUR has finally swung into net long. A$ and USDJPY are susceptible to short squeeze and long liquidation respectively.

Europe order book:
Stop loss: 1.3285/75, 1.3425 and 1.3450
Limit: 1.3235/30, 13300, 1.3350/55, 1.3390/400, 1.3410/20 and 1.3480/85

Primary trend: Bullish
Intermediate trend: Bearish for 1.2800/50
Minor trend: Mildly bearish

Technically, shorter intraday indicators are in o/s territory which could provide support at 1.3300 for now. However to note, the longer intraday still has room and the daily/weekly indicator are still in o/b zone. The dark-cloud cover candlestick pattern on Friday and the bearish divergent signal have both increased the probability of a near term top. Expected range 1.3350/60 to 1.3230/50.

E$ 8-hourly chart - Bearish divergence in the mature stage

Thursday, 1 August 2013

E$ resisting in a strong USD environment...

E$ continues to resist against the USD strength on the back of firm EURxxx, notably EURAUD. At the current level of 1.4800, I believe EURAUD still has another wave higher (potentially 1.5350/5400) to complete this recent rally before a meaningful correction. This should provide us the cyclical timing as to the reversals of both E$'s near term top and A$'s near term bottom. After this EURAUD's parabolic surge, a subsequent correction back towards 1.43/4400 is expected in the weeks' ahead.

Do note that the USD index continues to look firm and I would expect the greenback to appreciate against most currencies at least in the first half of August. With that, USDJPY should get a boost for 101.50/102.00 with strong support at 97.00/50.

CFTC COT Report: Speculator's accounts as of 23 Jul 2013
EUR:   -27,900 vs -37,165
JPY:    -87,496 vs -85,762
AUD: -63,982 vs - 70,686

Europe order book:
Stop loss: 1.3165/50, 1.3210/00, 1.3350/55, 1.3380 and 1.3420
Limit: 1.3165/50, 1.3210/00 and 1.3345/50

Primary trend: Bullish
Intermediate trend: Bearish for 1.2800/50 (to be reviewed if 1.3416 breached)
Minor trend: Range ahead of US employment data tomorrow

Technically, shorter intraday indicators have slipped into o/s level while the longer ones are only just coming off the o/b zone. This may suggest limited downside with an increased probability of overnight high being retested. Intraday momentum indicators suggest a high probability of range consolidation with an initial bearish divergent signal which is still too premature to put heavier weightage on. But do note that the daily indicator is still pointing firmly higher which should caution one against going aggressively short in the E$ just yet. Expected trading range 1.3320/30 to 1.3220/30 (on first test only).

E$ 8-hourly chart - Initial bearish divergent signal, still premature.......
Last update "Are we done yet?", 24 Jul 13, I have warned of a potential bounce in A$ around 0.8870/900. However, based on current development, price remains heavy and A$ looks vulnerable for 0.8600. Strong resistance 0.9100/20 should cap any rebound for this round. At this point in time, the cyclical timing seems to coincide with the EURAUD view above. Will update if new signals emerge.
A$ 8-hourly chart - Price action remains vulnerable to the downside