Shaken but not out!

Overnight, E$ defied gravity and continued its relentless grind higher soaking up heavy supply and triggering buy stops. The price action was unusual as I witnessed the rally last night. Despite the dark cloud cover candlestick pattern, E$ replied with a very potent turnaround with the daily range totally engulfing the day before (remember, no certainty?). For this, I must admit I was not mentally prepared for and will take a step back, let the market unfold a little further before I commit to a minor trend view.
Having said that, I still maintain that E$ remains susceptible around these levels for a very quick snap back, which has a higher probability of materializing in August.

Europe order book:
Stop loss: 1.3165/50 and 1.3305
Limit: 1.3165/50, 1.3300, 1.3320/25 and 1.3340/50

Primary trend: Bullish
Intermediate trend: Bearish for 1.2800/50 (to be reviewed if 1.3416 breached)
Minor trend: Mixed

Technically, intraday and daily indicators are all in o/b levels. However, I receive mixed signals on the intraday momentum indicator at this point in time (1.3275) with some showing further upside momentum but contradicted by a bearish divergence signal. This should hold us back from turning overly bullish in case the E$ went for another spurt towards the trendline resistances (1.3340/70) tonight.
For the diehards, I recommend a scaled down notional for a speculative sell at 1.2330 with a stop above 1.3416 for a take profit at 1.3230. Its Friday, remember your trailing profit stop!

E$ Daily chart - Trendline resistance...

Reversal pattern = Checked!!

Like it or not, for E$, most reversals were preceded by either a bullish/bearish engulfing or dark cloud cover/piercing candlestick patterns (see chart). After studying the intraday price action and confirmed by a daily dark cloud cover candlestick pattern, the probability of E$'s recent rally hitting a wall has definitely increased (nothing is certain in the financial market!) However, as we slip into the daily Ichimoku cloud, we must be mentally prepared for some back and forth price action until we break free below the 1.3100 big figure where we then have to contend with the bunch of daily moving averages (DMA200/50: 1.3079, DMA 21: 1.3047 and DMA100: 1.3027).

No updates on the order book today.

Primary trend: Bullish
Intermediate trend: Bearish for 1.2800/50
Minor trend: Mildly bearish

Technically, shorter intraday indicator has come off its o/b zone but the longer intraday and daily indicators are only just starting. Upside momentum has waned and downside momentum is building up.
Expected range 1.3230/40 to 1.3100/20 (expanded 1.3060/80).

E$ Daily chart - Reversals

Read my update "Are we done yet?", 24 Jul 13, for AUDUSD view.

Where art thou going, my precious metal?

Since my last writeup "Initial target hit, whatz next for XAUUSD?", 15 Apr 13, the yellow metal has touched my 2nd target and its time for another update.
To give all a sense of proportion and perspective, I have included a multi-year monthly chart here.
After touching a low of $1,180, XAUUSD has managed a recovery to $1,375, just shy of the pivot band at $1,390/400.

Fundamentally, XAUUSD's recent years of rally was on the back of Fed's QE, it is quite difficult to reconcile with the speculation that gold has completed its downward correction here and is due to head much higher from here when Fed is only just starting talk on tapering. Therefore, I humbly feel that this precious metal has scope for more downside and price will probably languish around the low, until maybe one day when fears of global inflation start to steal the headlines.

Technically, as long as it stays below the pivot level, probability of the yellow metal falling back to retest the recent low is high. That being said, I have observed that the recent recovery's price action has packed quite abit of momentum. As a result, there is sign of bullish convergence though its still very premature to place too much weighting on this signal. But it may give hint of a potential temporary bottom with XAUUSD going into a more elaborate consolidation between $1,200 to $1,400.
As of now, I place a higher probability of another wave lower towards $950-$1,050 to complete this cycle of correction.

Primary trend: Bearish for $950-$1,050
Intermediate trend: Range between $1,200 to $1,400

XAUUSD Monthly chart - Better perspective with a long term chart

Are we done yet?

A very potent full moon this month indeed. With one more burst in reaction to the weaker than expected German Flash Manufacturing PMI number, E$ cleared another batch of stop orders to print a high of 1.3254, which is at the top end of my intermediate term range. At this stage, I have to believe that the risk/reward should start to favour holding short E$ with the next strong resistance at 1.3360/80. Signs of a bull USD resurgent has surfaced as we scan across the spectrum of USDxxx.

Europe order book:
Stop loss: 1.3080
Limit: 1.3125/15 and 1.3390

Primary trend: Bullish
Intermediate trend: Range between 1.2800 to 1.3200/50
Minor trend: Mildly bearish

Technically, longer intraday and daily indicators are in o/b zone. Intraday momentum continues to point higher following the surge to 1.3254 though signs of bearish divergence signal has emerged. In the days ahead, E$ is expected to fall back to the bunch of technical supports ranging from 1.3020 to 1.3090. For today, trading range from 1.3250/60 to 1.3150/70 (expanded 1.3120/30).

E$ Daily chart - Top range of intermediate trend hit 

A$ has finally broken the ascending trendline (chart does not reflect) after a rejection at around the 0.9300/20 resistance level forming a triple top. This will put pressure on the pair to test pivot at 0.9150/70 before falling back to the low end of the range at 0.9000/30. Like I have mentioned before, 0.8870/900 is a level to be reckoned with and one has to hold back being overly bearish when nearer for this round.

A$ hourly chart - Resistance band around 0.9300/50 and the support trendline

The time of the month....

Market got an early treat to the full moon effect as PBOC's move on Friday and the post Japan election Monday gave speculators the best excuse to inject volatility. Despite the sharp move higher, 1.3180/200 remains intact as E$ continues to consolidate within the defined range (see chart). Likewise for A$, this pair still lacks near term direction as it consolidates within 0.9010/30 to 0.9280/310.

CFTC COT's report: Speculator's accounts as of 16 Jul 13
EUR:   -37,165 vs -40,900
JPY:    -85,762 vs  -80.305
AUD:  -70,686 vs -63,255
Except for E$, JPY and A$ have both added on to their existing short positions

Europe order book:
Stop loss: 1.2990, 1.3050-40, 1.3065, 1.3080 and 1.3200/10
Limit: 1.3055/50, 1.3125/20, 1.3170-90, 1.3200/10 and 1.3250/60

Primary trend: Bullish
Intermediate trend: Range between 1.2800 to 1.3200/50
Minor trend: Mildly bearish

Technically, intraday indicators are heading into o/b territory. Intraday momentum has been neutral and still pointing to consolidation which at current level (1.3165) would suggest higher downside risk. This is also supported by intraday trend indicator which is shows that E$ is ripe for a reversal. I shall maintain the same strategy of trading the defined range for now. For today, expected range 1.3170/90 to 1.3080/100.

E$ 8-hourly chart - Still within the defined range....

xxxJPY the focus for now....

Now that Bernanke has straightened things out, I can only imagine we are left with the Japanese upper house election as the next major event risk, overshadowing the G20 meeting over the weekend. The relationship? Not too much in the USD against the world but attention will shift towards the xxxJPY which will have indirect impact. The textbook play should be buying USDJPY for Abe's victory but how the market pans out subsequently will depend largely on how much that has been factored in by Friday's close.

Europe order book:
Stop loss: 1.2990, 1.3050-40, 1.3065, 1.3080 and 1.3210
Limit: 1.3060/50, 1.3150, 1.3170-90, 1.3210 and 1.3250/60

Primary trend: Bullish
Intermediate trend: Range between 1.2800 to 1.3200/50
Minor trend: Mildly bearish

Technically, shorter intraday indicator is in o/b zone but longer ones around mid level. Intraday momentum indicator suggest consolidation and at current level of 1.3136, there is more downside bias.
Along with other technical signals, I still prefer to fade into rallies. Expected trading range 1.3170/90 to 1.3000/20. Its Friday, stay nimble, try to take as much off the table and enjoy your weekend.

E$ Daily chart - Potential price action for today....

The deeper "B" wave has unfolded in USDJPY and topped off at 100.86 before a quick correction lower. However, I am still not very convinced that USDJPY is ready for sharp sell-off just yet before another attempts for 101.53 and 103.73 which will be dogged by some choppy price action, as witnessed earlier. Staying out of this pair ahead of major risk event.

USDJPY Daily chart - Possible scenarios...

Firmer EURAUD for 1.4400 implies softer AUDUSD in the coming trading session. Expect AUDUSD to fall back to 0.9020/30 with 0.9200/20 to cap.

USD back on track.....

Market whipsaw as expected during the NY session as Bernanke clarified his stand on Fed's action on QE. Amid the volatility, DXY closed Wednesday weaker below the DMA21. USD bears' victory was short lived as the index surged through the resistance to recapture the pivot point this morning. Having observed the price action in the past 24hrs, it has become apparent that the recent USD correction might have already run its course and is ready to power ahead again in the coming weeks.

Europe order book:

EUR:

Stop loss: 1.2990, 1.3050-40, 1.3065, 1.3170-90

Limit: 1.3060/50, 1.3150, 1.3170-90, 1.3200-10 and 1.3250/60

JPY:

Stop loss: 98.80, 99.25/20, 100.45/50, 100.90/00, 101.50 and 102.00

Limit: 99.00, 100.45/50, 100.80, 100.90/00, 101.50 and 102.00

E$

Primary trend: Bullish

Intermediate trend: Range between 1.2800 to 1.3200/50

Minor trend: Mildly bullish but capped at 1.3200/50

Still maintaining my view that E$ will be capped around the upper band 1.3200/50 and eventually fall back to 1.2750/2800. But however, EUR crosses should remain relatively firm.

Technically, intraday indicator has unwound from its o/s condition but still has room on the upside. However, daily indicator is just getting into o/b level. Shorter intraday momentum indicator suggest range consolidation between 1.3080/90 to 1.3180/200 but longer ones are beginning to point lower.

Expected trading range 1.3170/90 to 1.3040/50. Prefer to fade into rallies. 

E$ Daily chart - Pretty much sums up my view for 2013....

USDJPY

In view of the USD strength, USDJPY should continue to stay firm with initial target of 101.53. However, one has to take note of the event risk i.e. the Japanese election over the weekend. Strong supports levels are 98.00/10, 99.00/10 and 99.60/70. 

USDJPY Daily chart - Y99.00 has formed a solid base to propel it higher....

AUDNZD

Price action in the past 12hrs has not been encouraging and coupled with the view that AUDUSD has probably seen its near term highs around 0.9300, I have decided to cover the long and take a small loss. In the coming weeks, I expect AUDUSD to fall towards 0.8800/50.