In this email I am going to give you my view on the market for the Asian/London sessions in the market for today, spanning Tuesday the 29th to Wednesday the 30th of June 2010.
There was no swing trade for yesterday’s Asian-London session.
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The chop continues for many I am sure in brutal fashion.Position trades spanning more than one day are preferred in this environment. These trading environments usually presage a new direction or upcoming powerful move and so the markets will try to shake as many players out before the real big move comes, whatever that may be.Be advised and extreme caution is warranted, especially since today is the last day of the month and the quarter and some significant “painting” could be in the works or as the pros call it ... position squaring.The USD’s weekly closed under our key pivot of 87.0 and after a very weak bounce is now near the bottom of the range near 85.0, as seen in the USD daily and weekly chart herehttp://www.stockcharts.com/charts/gallery.html?$USD. Another advance above 87.0 is now a possibility with risk trades being shunned at the moment as stocks are unloaded globally and low interest rate currencies such as the USD and JPY are be repatriated.A break below is still expected but only with a chop in this range for some time that could knife through it later this week with key manufacturing and employment reports due unless global equities crash from number being extremely weak.The retrace expected so far has been feeble at best with only an exact 38.2% Fibonacci retrace to 86.42 after which a resumption of the new USD downtrend seems to have started and another bounce to test that level is in progress and should the 86.42 level be broken to the upside then a move to 87.4 is expected.Extreme caution is warranted in this range as a breakdown could occur on such persistent weakness and would be very hard to play until the chop drops and allows a low risk entry, perhaps at the top of the range at 85.5-86.5 area. Either way, volatility gets another boost and we should start thinking about initiating core positions on any USD strength to play its eventual weakness.
In terms of technical considerations in the EUR/USD, two potentially bullish situations are taking place. From a weekly long term standpoint, the main trend is down, but the currency was able to pierce through a retracement zone at 1.2164 and now above the 1.233 area. The main intermediate term trend is now up and a move to and eventually through the 1.245 – 1.246 pivot area is expected.The question of whether a significant retrace occurs appears to have been answered with a somewhat feeble 38.2% Fibonacci retrace down to the 1.222 area earlier last week and the 50% level and prior breakdown level at 1.217 yesterday limited losses and triggered some light short-covering. This area is not likely to hold because of the record number of shorts in the market. Expectations are for the EUR USD to feel more pressure down to 1.210 area before the intermediate trend reasserts itself and the continuation of a 2 - 3 week rally with the 1.278 region as the next potential upside target area is still in play.The U.S. data continues to be abysmal from a strong currency standpoint.The prior EUR/USD 1.1876 – 1.232 range is still support.In summary, the weekly chart is set up for a strong retracement rally to 1.2784, with the Euro holding a test of a minor interim retracement levels so far.The topping action in the USD can also be confirmed against the bottoming action in the EUR as mirror images of each other and the EUR chart can be seen here http://www.stockcharts.com/charts/gallery.html?$XEU.We will play both ways with no bias for now; anticipating trades back to defined retracement levels.Place your trades accordingly.All charts courtesy of www.stockcharts.com.
The JPY broke above the 200-day moving average; after bouncing hard at the lower 50-day moving average and look to continue a short term uptrend maybe giving a clue to the USD expected retracement continues to power higher but caution is advised as it could just as easily top out here leaving you flat-footed and PIP less, as seen on the chart given here http://www.stockcharts.com/charts/gallery.html?$XJY.The GBP as seen here, http://www.stockcharts.com/charts/gallery.html?$XBP, also looks to accelerate after clearing its 50-day MA which also coincides with the 50% retracement of the prior April-May decline.A solid break above the 148.1 area set up the GBP for a quick pop to the 150.5 level and continues to be expected to move to the 155 area in short order.
There are some reports of significance to trade through today, notably EU inflation and US employment and manufacturing reports that could affect sentiment prior to release.Again a potential break of the critical 85 area with potential fireworks for a fast break move is possible and traders should be aware of this level this week.
The swing trade for today’s Asian-London session is to BUY the EUR/USD @ 1.2198 with a STOP @ 1.2165 and a TARGET of 1.2276 for over 70 PIPS.
That's it for today. Remember that I trade in the Live Forex Trading Room between 1am-6am Eastern Time. I will be hosting my regular 3-4 hour session and assessing and exploiting PIP opportunities as they arise.
Enjoy trading and good luck everyone!
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