Awakening.....

Great move in the E$ overnight as it rebounded strongly to the target of 1.3290.

However, the push towards high of 1.3291 seemed exhaustive as bearish divergence emerges. Technicals are suggesting that E$ should move into consolidation and I expect market to hold 1.3220/40 (see chart) to 1.3280/90 during the Asian session. 


That being said, the underlying momentum remains strong at this hour of writing which prompts me to believe that E$ may want to test higher towards 1.3330/40 during the Euro/NY session (probably triggered by the US job data). 


I will not discount 1.3380/90 but this level will be a stretch following yesterday's price action and I will be keen to sell at those level for the day.


Stay nimble as I expect choppy price action. Last reminder, its full moon week!

All the best and have a great weekend ahead!!


Update1: Underlying momentum starting to turn neutral which tilts the R/R to sell rally. If one chooses to trade the current range, do not get aggressively long in the E$. Remember, its all about probability! 
I would rather head out to the IT Show now than to be tortured by the 10pip range!!


Update2: I have a strange feeling something is brewing..... R/R favoring the short side in currencies and will not discount the lows of this week to be retested. 

Neutral ground.....

Indeed E$ traded within the guided range yesterday without much fanfare. 

Basing on the past 48hrs price action, E$ downward momentum has pretty much waned and has turned neutral to slight bullish. For now, market is comfortable mark timing within 1.3100/20-3180/00 and awaiting for an impetus to break out either way, probably during the Euro/NY session or even into Friday's US employment data. Can't get too bullish near the top end of the band for now.

To certain extent, I believe the E$ at current level has already priced in a possibility of a negative outcome from the Greek PSI and the realization if happens would trigger an initial sell off toward 1.3050/80 before a strong rebound toward 1.3200 and potentially 1.3260/90.

Some useful information I gathered so far..... Asian reserve manager interest around 1.3100 and stop loss orders below 1.3080.

Do take of note of BOE, ECB and BOC announcements this evening.

All the best!

Update1: The impetus came earlier than expected and we have our breakout and up!!  Apparently, there was some news on the optimism over the Greek PSI take up and E$ wasted no time to chase its target of 1.3260/90.
Heard strong demand at 1.3160 for now. Enjoy the ride!

Humpty Dumpty had a great fall...

So the fundamental triggers for this risk aversion seem to be:

• Fed's signal to an end to QE 
• Slowdown in BRIC economies, notably China
• Not talking about Europe anymore!

Does that mean cheaper commodity prices in the near future, at least for a while? Can't wait for crude price to collapse.... wink!


This week will be interesting as the mix of full moon and increasing correlation amongst asset classes should come out with a potent concoction!


Before I start, let's thank Temasek for that signal yesterday... smart money indeed!


E$ has trigger a bear signal and I have to claw back on my bullish view for now (delayed). With that signal, it opens up scope for E$ to retest previous low 1.2973.


However, in a risk off environment, EURXXX will benefit as carry trades are being unwound. Expect EURXXX to correct lower over the next 48hrs before rebound. Will watch for buy signals. EURAUD & EURNZD will be the fun pair.


For E$, may see early pressure following yesterday's sell-off. 1.3070/80 to hold on first dip and 1.3160/80 region to cap. Be careful of whipsaw price action!

When in doubt, cut out, step back, and re-assess. Never be held hostage by a bad position. There will be lots of other opportunities.


Update1: Waning downside momentum in the currencies suggest consolidation with an increase in probability of short squeeze. 

Follow the leader....

Just learn that Temasek has sold 64.2mln shares of Sembcorp Marine. Not about to dwell into the percentage but is this a totally commercial decision or a case of professional money getting out ahead of a potential spike in risk aversion?

Of course the other observations have been:

• selloff in precious metals
• relatively firmer USD, EUR, GBP & JPY
• softer NZD & AUD

No one can confirm this until it happens but tell tales must not be ignored and prudence guides us to moderate our decision-making.

Indeed E$ unfolded as forecast yesterday. Tested 1.3160 during Asian hrs and bounced off to test the high side during the NY session. Another 2 pairs of EURNZD and GBPAUD had a great field too! :)

So what's in store for us today?

11.30am, RBA rate decision will inject the one and only boost of testosterone into the market. Don't think they will hike, many are expecting no action but the surprise will be a cut or a dovish enough outlook. 

Has the market not already geared for less optimistic outlook for Aussie rates or is this only the tip of the iceberg? Personally, I feel AUD is at the stage where it should be more vulnerable to negative news.

Back to the E$.....

Consolidating to build a base around 1.3200 (1.3160 should hold for this round). Still feel more upside bias with a test of 1.3280/90 (1.3350/60 news induced) amid choppy price action. EUR is seeing demand from the firmer EURXXX rather than a direct buy. Enjoy while it last for now.

Having said the above, I will not discount the possibility of E$ probing lower towards 1.30ish in the later days before it resumes its bull trend with target of 1.4000.

To be very honest, its murky today and I should be scalping and patiently await to re-enter long EURNZD.

All the best and will update as and when if there is anything exciting.


Update1: The conclusion of the RBA statement left open the possibility
of further easing if the economy weakened: "With growth expected to be
close to trend and inflation close to target, the Board judged that the
setting of monetary policy remained appropriate for the moment. Should
demand conditions weaken materially, the inflation outlook would provide
scope for easier monetary policy......"
AUD negative.....


Update2: Actually basing on EURXXX, the EUR correction on the downside may probably be over and resuming its uptrend. Will continue to monitor for more signals.


Update3: Sell-off in AUD & NZD should take a break for now.

The Eventful Week....

Good morning folks, its Monday again!!!

Hearing news Greece needs 3rd bailout? Boy, not too sure about you but I am getting quite sick already!!!

On the technical side.....

A bearish piercing pattern on the weekly chart increases the probability of further pressure in the E$ this week. But the easy money on the short side is nearing the tail end.

Expect early weakness toward 1.3150/60 but reckon this level to hold for now (1.3070/90 news induced). Maybe firmer price action into Europe/NY. However, 1.3230/50 1.3250/80 to cap for today. 

Note that this whole week will be dotted with noteworthy events throughout, so do take note of the timing of the announcements lest getting caught in news induced volatility.

I have taken profit on all positions ahead of targets. 

Weak heart? Go for tighter range trade (don't get too ambitious) BUT with stop loss at all times!

All the best and have a great week ahead!!

Will provide updates (if any), throughout the day if new signals emerge.

PS: Have not forgotten the magnitude of the sell-off in the precious metals last week. Will be wary as this can be tell-tale of something bigger to come..... either way! Before I end, take note that it is a full moon week, so expect the unexpected! (wolves howling in the background)    ;)




Update1: NZDUSD looking relatively more vulnerable for 0.8150 (Put on radar)
E$ stop loss orders below 1.3180 to 70 and above 1.3250


Have a bad feeling we may have a spike in risk aversion in the near future.

Skepticism?

TGIF my friends from around the world!

What now after the announcement of the LTRO and Bernanke? Clearly it has taken some steam out of the E$ and left many of us wondering the fate of this currency. Is the past weeks' bull run over and are we heading back to 1.2000?

I wish to think that we are in the Skepticism stage of the bull trend..... my view has not changed as long as certain technical considerations are not compromised yet. Guess it would have been a whole lot easier if the E$ had closed stronger for February. But wouldn't that have quickly changed the sentiment overnight? Tell-tales like this would suggest to me that E$ may want to probe for a stronger support level and consolidate before it springs itself to the next step, which is into the 1.35-37 band.


Past 24hrs price action suggests that E$ is still trying to find bottom amid bullish divergence signals emerging. That being said, I am mentally prepared for another leg towards 1.3230/60 before a meaningful rebound. Coincidentally, I gathered that there is a pocket of stop loss orders below 1.3250. 1.3330/40 to cap during Asian hours.


For the next 48 trading hrs, I see E$ consolidate between 1.3230/60-1.3390/410 with choppy price actions. No major breakout expected.

I took a small loss on my long E$ amid the uncertainty but am holding on to my tiny long EURCAD for now. But would like to re-establish long E$ if level is reached today probably during European/NY hours. Meantime, going for some guerrilla warfare trading  :)


Strategy for the day: Risk/Reward favours buying on dips.


All the best and have a great weekend.




Update1:  Covered the short E$ at current 1.3255 and await lower 1.3160/80 for the bounce.
Gathered there are more stop loss orders down to 1.3320 and 1.3280.


Update2: Cut long EURCAD @ 1.3075 and turned short for 1.2980.


Update3: Went small short on NZDCAD for 0.8100. Staying nimble on all positions!

A Stomach-Wrenching Day......

Anyone who was expecting a repeat of market rally post Bernanke's testimony was in for a rude shock!  


Indeed 1.3480 level resisted E$'s advance and left the downside vulnerable as market went for stop losses below 1.3360 subsequently. I took profit too early on the E$ short.


Turned long E$ again after Bernanke spoke but price action at NY close did not give me much comfort. Stop loss placed at 1.3290.


Currently, long E$ and EURCAD and keeping fingers crossed as I try to get some sleep! :)

E$ 2 hourly chart

Update 1: E$ remains vulnerable below 1.3350 for now but EURXXX providing good support. Any negative news could trigger another leg to test next strong support at 1.3270. Resistance band at 1.3390/410.


Holding on to my long E$ and EURCAD positions.




Scenario1: Regain and hold 1.3350 in the next 2-3hrs for a test of 1.3400 into NY


Scenario2: News induced dip to test trendline at 1.3250/70 support before recovery (low probability)