Lack of bad news re Spanish bank tests is causing short-covering

I don’t think we are witnessing any major move here, simply that some players were short EUR and playing ‘risk aversion’ trades in expectation of poor results from the Spanish bank stress tests and/or budget reform bill. Both have passed without incident so the shorts are covering.

AUD/USD worked through some decent offers at 1.0460/65 and triggered more stops above 1.0470 whilst EUR/USD is still edging higher and showing few signs of wanting to pull-back.

  1. Got it. thanks. maybe i have to learn the r:r from this month onwards. i risk a lot and mostly get lucky.even if I don’t I recover the loss in next trade

  2. Good morning Sean,
    My analysis goes like this:
    The first part of the correction wave from the 1.317 top is now finished. And we will witness a correction upwards. For the less Elliotist traders, I expect this will look like range trading in the 1.285-1305 window (mostly in the 1.29x area). Since the market is waiting for the spanish rescue plan to be triggered with ECB bond buying, I would expect further pressure to remain and the next bull wave that brings us to 1.335-1.348 not be triggered yet. In other words, this move up is just a “correction within the correction”. Therefore, I expect several days of ranging in the 1.29x area, until further risk-off comes to get us to test new lows. The 1.2815-1.2805 pivot point is in my opinion not valid anymore. It will offer some limited resistance. I will look to 1.274 area (61.8% fibo from the bottom of this year at 1.204). The 200-MA was so strong that it created this pre-bound that we are witnessing. Therfore, I don’t think it will provide any substantial support if we go down as well.

  3. Notice how nicely the 100MA and 150MA on hourly charts provide support to the EURUSD whereas they were resistance before 🙂
    MA are not always so remarkable.

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