Calm before storm.... Day 1

Good morning, friends!

Despite the fact that most major FX markets were closed yesterday, E$ unfolded almost exactly as forecast ie. retested the low and printed 1.3033 before rallying to touch 1.3133 high.

For today, I expect further consolidation with choppy price action but still maintaining an upside bias. If you are hoping for a few hundred pips range to trade today, I suggest you go play 36 holes. Range will be tight and is not going to be very exciting and I will just trade from the defined boundaries.

1.3055/65 to hold and 1.3140/50 to cap (1.3200/20 news induced).

All the best!

Easter Monday!

Happy Easter, friends!!!

Woke up in time to watch the last 2 flights playing from hole 15 till eventual 76th US Masters champion Bubba Watson beating Louis in the play-off!! It was such a pity that Phil Mickelson hit a triple bogey Par 3 in the front 9. The 2 widely expected winners ended in a tie..... Tiger Woods and Rory McIlroy 5 over. I may not be able to chart Tiger's game but with 4 days of the worst swings on the Augusta course and ended only with +5, the rest of the field will pray hard he doesn't get his rhythm back.

Ok, enough of golf.... back to the market. Liquidity should continue to be sub-optimal for today. Target for E$ remains at 1.28/2700 but for now, we should see some consolidation with risk/reward favouring buying dips for now.

Downside momentum has waned and suggest counter directional correction for the next 24 hours but first with a potential retest of last week's low at 1.3035.

1.3000/10 to hold (1.2950/60 news induced) and 1.3120/30 to cap.

Try not to be overly aggressive on the long side until more signals to support a stronger short squeeze.

E$ Head and Shoulder Formation

All the best!

Good Friday!

Happy Good Friday, friends!

E$'s consolidation ended faster than I expected yesterday and quickly fell to test the neckline support (see chart). Ability to hold this support for more than 6 hours, reinforced by bullish divergence and waning downside momentum, have increased the probability of a rebound in E$ today.

Couple of things to note, market is trading on very poor liquidity and we have the US employment numbers on a full moon day. So therefore expect choppy price action.

Taking all things into consideration, risk/reward favours buy on dips. Just manage your own risk knowing that the bigger trend is pointing down with 1.27/2800 target in mind. (6/10)

1.2990/3000 to hold (1.2950/60 news induced) and 1.3140/50 to cap (1.3200/10 news induced)

E$ Daily Chart

All the best and have a great weekend!

Round 2: Hibernation over....

Good morning, folks!!


Another dramatic day for E$ as it lost close to 300pips in 3 days amid sub-optimal liquidity condition.


A couple of observations and prognosis I want to share:
1.  E$'s inability to penetrate and close above 1.3390/420 for the month and quarter has indeed weakened the technical picture and E$ bulls have to be careful. In the past 48hrs, a couple of important levels were taken out without any signs of a rebound has strengthened this view. In the chart below, E$ has formed, in simplistic representation, a head and shoulder formation which suggest that E$ should be targeting the neckline close to the previous low of 1.3003 and subsequently 1.27/2800. This is viewed as a correction of the rally from 1.2623 to 1.3485 and this wave should be impulsive.


2.  USDJPY is looking vulnerable and I will not discount the possibility of a corrective plunge back towards Y76/77.  This will weigh on the xxxJPY which goes inline with Pt.1. In other words, the probability of a serious spike in risk aversion has risen relatively higher. If it ever materializes, it should happen within Q2.


So what's in store for us in E$ today? Short term momentum has turned up and coupled with oversold condition should trigger consolidation with upside bias. That being said, longer term momentum is still pointing down which remind us to be less aggressive on the long side scalp. 1.3100/10 to hold (1.3050 news induced) and 1.3210/20 to cap (1.3240/50 news induced). Asian hours will be boring, European/NY will provide relatively more excitement amid deeper liquidity.


By the way, I have forgotten to inform all that this is a full moon week. Full moon falls on Friday, coinciding with US employment numbers but of course +/- 2 days, we are already in the zone!

E$ Daily Chart

All the best!

Oops, I did it again.... said Fed

Good morning, Wednesday!!


E$ tumbled on Fed's minutes and QE3 was the culprit again..... likewise, I don't know about you, I am quite tired of this lame excuse to move the market.


Based on the weak close in E$, we should expect lots of selling momentum to follow through with the bears banging on these 2 supporting fundamentals ie. the Fed's minutes and Spain's woes.  However, if the support at 1.3200/10 holds, a short squeeze can be expected today albeit after hours of bull/bear struggle around the 1.3210 to 1.3250 band. 


For today, 1.3200/10 remains crucial, failing to hold will leave E$ vulnerable to 1.3150 before bounce. On the upside, many layers of minor resistance up to 1.3250 for E$ to contend with and stronger resistance is at 1.3280/90. A close back above 1.3300 today will be a bullish signal for 1.3380/90 to be retested.


Market liquidity is sub-optimal today and market move can be choppy as a result. Stay nimble!

E$ 2-Hourly Chart

All the best!


Update1: Would strengthen bullish picture if E$ can hold above 1.3235/40 for the next 3 hours.


Update2: E$ bulls, don't be too anxious to jump in first. Momentum is still pointing down and there is no signs of reversal just yet. From the past 24 hours price action, E$ does look heavy and has increased the probability of retesting previous low 1.3003 (head and shoulders neckline at 1.3010/20. E$ needs to close above 1.3300 to invalidate the bearish technical picture. No positions for now, awaiting stronger signals either way before trade.

Stucked....

Good morning folks!


E$ was rejected once again at 1.3380/90 yesterday and price action suggest that we should be range trapped between that resistance to 1.3250/70 for now. Being a technical trader, I can imagine stop loss orders being build up on either side just outside the range in the coming days before the breakout, potentially Thursday or Friday. 


A couple of observations:
1.  E$ once again closed 6 consecutive days above 1.3300 yesterday (closed at 1.3320) - underlying Bullish signal
2.  Based on the close at 1.3320 yesterday, it just barely fulfilled a bearish piercing pattern against Friday's price range - Daily Bearish signal


Confused?... in a nutshell, market is telling us that underlying strength in E$ is firm but for today, we probably see downside bias.


At this moment, I am mentally prepared that once the breakout comes, it may break on the downside first to flush the sell stops all the way to probably 1.3200 before turning back up to break 1.3390/420 where loads of buy stops are building up now.


For today, CNY Non-Manufacturing PMI at 9:00am and RBA rate decision at 12:30pm should inject some life (but don't hold your breath). Chinese is still out till Thursday. Expect tighter range 1.3360/70 to 1.3280/90 (1.3240/50 news induced). (5.5/10)

All the best!

New quarter!!

Good morning Monday!


This will be a shortened week as most markets will be closed for Good Friday. However, US Change in NFP will be announced at 8.30pm. So make hay while the sun shines!


E$'s inability to penetrate the 1.3390/420 band on its third attempt will encourage profit-taking and this will weigh on the currency. Price action and momentum both also suggest a near term top with a potential correction lower. 


I do not expect at this moment a major reversal from here despite a triple or some would want to think its quadruple top on the 2-hourly chart. However, a consolidation back to sub 1.3300 is highly probable.


So for today, 1.3380/90 to cap (1.3430/40 news induced) and 1.3240/50 to hold. Sell rally strategy. (7/10)

E$ 2-Hourly Chart

No frills Monday, all the best!