E$ indeed stayed within the prescribed range with a low of 1.3425 to 1.3520 yesterday but with lots of whipsaw action in between. It started off with Swiss name buying from the lows but subsequently Asian sovereign name was seen offering around 1.3485. It managed to pull higher, motivated by the stops above 1.3500/10 until it met with supply from the Swiss name again. Prices fell very quickly as market was pretty illiquid and directionless. I expect the consolidation to continue till Friday with the recent wider range intact. This afternoon, E$ got sold off another round on the back of weaker French and German GDP numbers, taking out some stops sub-1.3300 before rebounding to 1.340ish. A break below the DMA21 at 1.3440, coupled with a break of 1.3425, confirms near term weakness with E$ potentially retesting the week's low of 1.3322. 1.3280/3300 forms a solid support which I see should hold for this round. Daily momentum has turned from up to consolidation and admittedly, my bullish call will have to be delayed.
London order book:
Stop loss: 1.3330/20,
Limit: 1.3300
Technically, intraday indicators are beginning to slip into o/s territory. Shorter term intraday oscillator is starting to show signs of waning downside momentum which has increased the probability of a bounce. It may be worth a try to buy on dips towards 1.3310/20 with risk limited to below 1.3280 and profit take around 1.3420/40.
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| E$ Hourly chart - First sign of bullish divergence |
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