Some buying continues despite the dovish comments

Hi and welcome to our EUR/USD brief

Yesterday was a good day for us with our favored short providing us with a small winner early, and another possible entry soon after. We never really got entries on the other options, Daily and weekly pivots were smashed through and retest entries wouldn’t have been hit.

Context
It seems people are taking it in turns to talk the Euro down with Mr Bernanke being followed, by German leader Angela Merkel, the IMF amongst others having dovish comments on the currency.
This combined with Spanish Bond prices starting to push out again have seen some quick drops in the Euro. Yet each time it drops we see buyers come back in and push it up. The Euro price emains close to where it was 10 days ago

Technical Analysis
We still have a triple bottom at around 1.2170 and as mentioned this has created a decent bounce. Its now a crucial level on any trip down. We also seem to have a little resistance band building around 1.2310. I still have lower highs and higher lows as the range starts to squeeze between these levels.
We still have the daily pivot above the weekly pivot, and both some distance from the monthly pivot. Normally in these conditions we will see Dp start and try and close the gap between itself and MP. The daily pivot has risen for the fourth consecutive day, on the proceeding days price has broken pivot and then bounced back above. I am expecting at least a test of DP today if the trendline is broken.

The Day Ahead –
It’s a strange day with the technical slightly bullish, and the fundamentals a little more bearish for me.
Overall I am slightly bullish for today with the triple bottom, Daily Pivot above Weekly Pivot and over extension from Monthly pivot. However I think we are a crucial stage for the day as price respects our trendline. If the trendline holds its very bullish and if it breaks it (which it is doing as a write this) then a visit to DP is likely.
Bias- My overall bias is still short, I am enjoying this retracement long as it will provide better and better shorting opportunities in the future. I am slightly Bullish today…
NO TRADE: I think you could argue that we shouldn’t trade inside the Tri-angle… but I will offer some entries
Short entry: My favorite trade here would see a rally to test the trendline from below, and then an entry down to DP.  Similar to yesterday I would be happy to see a break of DP or Weekly pivot, but would want to see the level clearly retested, and a price action trigger such as a high test bar before I could enter.. I still feel cautious short today. I am sure the short is coming but think it might be Friday or Monday when the pivots have reset.

Long Entry: Break and test of the trendline would encourage me long. My concern long at this stage is target with resistance just above 1.2300.

Watch out for Manufacturing news today, this exactly the type of market it can cause a stir.


RED News Today GMT
1:30pm   USD    Unemployment Claims    367K 350K
3:00pm    USD   Existing Home Sales 4.64M 4.55M
3:00pm    USD   Philly Fed Manufacturing Index -7.9 -16.6
 All the best
PBT