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 

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