Happy New Week Surfers – ok it’s Tuesday but the Poms took the day off yesterday, effectively removing the liquidity from our market.
I confess to being less than traumatised by not trading yesterday, given the need for consolidation, following the 225 pip tumble the EURO suffered on Friday and over the weekend. Little wonder of course, given election activity in France & Greece that we have seen a break of the strong psychological 1.30 level. That break at this stage is false, the market having rallied 50% yesterday. One can but wonder how long the resilient EURO can withstand the continual barrage of pressure?
The EURO is now under technical pressure, adding to it’s fundamental woes. The rejection last week of 1.3285 at the confluence of our strong resistance trendline, has provided yet another crash, after a sustained, if unspectacular rally over the past 3 weeks. This very familiar pattern has been with us most of 2012. The BIG difference this time around, is we are seeing lower highs and lows on all timeframes and price action has broken below the Support Trendline that began in January. From an intraday point of view, signals are all bearish with pivots in no doubt that the direction is South.
The tenuous hold on bouyancy for the EURO is being provided by a 120 pips gap between Daily & Weekly Pivots (suggesting cross is oversold), an open gap, our strong support level of 1.3033 and the pychological 1.30 level.
The Day Ahead
Despite the EURO being a little oversold (strange to say with price action above Daily Pivot), it’s difficult to see technicals overriding fundamentals today. As London gets it’s first opportunity to trade weekend developments in Greece & France, as well as Employment figures out of the U.S. from Friday, we may see some volatility early. Trendlines are difficult to find with the only Support line based on the low volume and liquidity of yesterday & Asia today = not very reliable. Until price action gives me something more reliable, As I write this, price action is at an acute intraday resistance line and giving me a tradeable Surfing The Pips Pattern. The fact that the trendline is acute and all signals are bearish makes it very risky but I will take a very small stake long targeting Daily Resistance Level 1.
Make sure there’s plenty of wax on your board surfers, could be a a bit of a ride coming.
Have a good one.
Geoff Pyne | Certified SurfingThePips.com Trader