Next update from 18 Jun 2013... Happy trading!

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The time has come....

Spectacular rally in E$ exceeded my expectation by a touch to print high of 1.2977. Looking at the recent sessions (see chart with eclipse), one would have noticed that each sell-off is followed by a bullish engulfing candlestick pattern the very next day. Combining this occurrences with other technical signals, the probability of E$ breaking out and up has increased significantly. Note that a survey with traders revealed that many are still favouring to fade into rally just below 1.3000 with tight stops.

Europe order book:
Stop loss: 1.2890 and 1.3050/55
Limit: 1.2990/300

Primary trend: Bullish
Intermediate trend: Bullish
Minor trend: Bullish (Down/Up market with potential for breakout)

Technically, intraday indicator is in the o/b zone. Shorter intraday oscillator indicator is suggesting consolidation which at current level would mean more downside bias. However, the longer intraday momentum indicator is still pointing firmly higher. Taking all available intraday technical signals into consideration, the highest probability scenario would be a down first then up market. Expected range 1.2890/910 to 1.3050/70. Initial strong resistance at 1.3020/30 and strong support at 1.2830/40. Prefer to buy dips.

E$ Daily chart - Bull up for a breakout

No incentive to breakout....

E$ remained stucked within the defined range as expected. It was sold off during the NY session and consolidated till early Europe came in to knock it lower to 1.2838. Having studied the Asia order book, I expect the 1.28/1.30 range to hold for at least another 24 hours. There is basically no notable stop loss orders on the outside of the range to incentivize any breakout for now.

Asia order book:
Stop loss: Nil
Limit: 1.2750, 1.2820/00, 1.2993-98 and 1.3000

Primary trend: Bullish
Intermediate trend: Bullish
Minor trend: Bullish within the defined of 1.2800 to 1.3000

Technically, intraday indicator is at o/s level after the sell-off last night. Intraday oscillator indicator continues to suggest consolidation which at current level of 1.2845, there is more mileage on the upside. First level of strong resistance stands at 1.2890/2900. Expected range for today, 1.2820/40 to 1.2950/60. Risk/reward favours going long.

E$ 8Hourly

Range defined for now....

Looking back at the past 8 days' price action, one would have noticed the defined range of 1.2800 to 1.3000. With the more recent rejection at the 1.3000 resistance, E$ could be pressured to retest the lower band of the range this week. The 61.8% retracement level is at 1.2873 and the trendline is around 1.2850 where some stop loss orders are currently lurking. Having said that, we have to take note that last week actually closed a bullish piercing candlestick pattern. Therefore, one should not get overly bearish when near to the lower band. For today, without much fundamentals driving the market, it may end up being stop loss seeking, whichever is nearer (check out the Europe order book).

CFTC COT speculator's orders as of 21 May 2013:
Eur: -80,949 vs -46,921  (net shorts increased by 73%)
Jpy: -95,186 vs -78,560

Europe order book:
Stop loss: 1.2860/50, 1.2960/65 and 1.3050
Limit: 1.2820/00, 1.2993-98 and 1.3000

Primary trend: Bullish
Intermediate trend: Bullish
Minor trend: Bearish within the 1.2800-1.3000 range

Technically, intraday indicator is at around the neutral 50. Intraday oscillator indicator is suggesting consolidation within 1.2890/900 to 1.2960/70 before expanding to 1.2840/50 - 1.2960/70 during the NY session. I would look to fade into the rally for today with risk above 1.3000.

E$ Daily chart - Defined range for next 48 hours

Eyes on Bernanke....

Currently, the 1.3000 pivot is the level to watch and recapturing would relieve the recent bearish pressure on E$ and should subsequently see E$ trade up to test 1 May's high of 1.3243. Gentle reminder that today is the start of the full moon zone and I am sure Ben Bernanke is going to inject volatility into the market when he testifies tonight at 10pm (Sin/HK).

Europe order book:
Stop loss: 1.2750/35, 1.2940/50, 1.2960/70 and 1.2970/300
Limit: 1.2790/70, 1.2820/00 and 1.2860/40
Orders do look very lopsided with strong bids below and buy stop orders lining up to 1.3000.

Primary trend: Bullish
Intermediate trend: Bullish for 1.34/1.35 (unless 1.27447 is breached)
Minor trend: Bullish for 1.3000

Technically, intraday indicator has swung into o/b zone and that will probably add on more resistance for rate to pull higher. However, intraday oscillator indicator is still showing momentum pointing firmly higher. Expected trading range 1.2850/70 to 1.2980/300. Risk/reward still favours buying on dips.

E$ Daily chart - Mean reversion?

Euro bulls have upper hand....

E$ remained well bid throughout yesterday's session with every dip meeting demand and closing Monday just off the high of 1.2900, forming an bullish engulfing candlestick. However, the resistance at 1.2900/10 proved to be formidable, at least for this round, as intraday indicator went into the o/b zone. Market is probably too quick to jump into the reversal story and this current sell-off should flush out the weak longs before it find first level of support around 1.2820/30 and stronger at 1.2780/900 for a rebound for the 1.2950-1.3000 area in the days ahead.

Europe order book:
Stop loss: 1.2750/35, 1.2905/15 and 1.2915/25
Limit: 1.2790/70

Primary trend: Bullish
Intermediate trend: Bullish
Minor trend: Bullish for initial target 1.3000

Technically, intraday indicators have come off its highs and still have room on the downside based on current level of 1.2864. Intraday oscillator indicator suggest range consolidation and at this moment a base is also in the making. Given a bullish engulfing candlestick pattern, one has to be cautious getting overly bearish when nearer the lower band of the range. Expected range 1.2820/30 to 1.2930/40. Risk/reward still favours buying on dips.

E$ 4hourly chart - Bullish price action....

Near term turning point....

Indeed, E$ tested to a low of 1.2796 before rebounding and closed the week at around 1.2835. As I have mentioned in "Mixed signals...." (17 May Fri), the waning downside momentum, coupled with an extreme o/s condition resulted in a rejection in the 1.2800 area. At this point, bullish convergence has emerged and this has increased the probability of a near term base. A potential reversal within a full moon zone, which starts from this Wednesday and possibly into next Monday, will certainly makes things a whole lot more interesting and exciting.
Considering a 40% jump in the net euro short positions from the previous week, market does look more susceptible to shortcovering.

CFTC COT report: Speculator's account as of 14 May 2013
EUR: -46,921 vs -33,533
JPY:   -88,407 vs -78,560

Asia order book:
Stop loss: 1.2800/790 and 1.2890/900
Limit: 1.2950

Primary trend: Bullish
Intermediate trend: Bullish (unless 1.27447 is breached)
Minor trend: Bullish for 1.3000 (initial target)

Technically, shorter intraday indicator is getting into o/b level whereas the longer intraday/daily are still in o/s zone. Intraday oscillator indicator suggest range consolidation. Taking all available technical signals into consideration, I expect today's range from 1.2810/20 to 1.2890/900. Risk/reward favours buying on dips.

E$ 8hourly chart - Bullish convergence