Was the move up the Bulls, or some Bull from the ECB

Hi and welcome to our blog, and our EUR/USD brief

Yesterday was a great day for us with an expected spike in price coming back and giving us a great pivot test to trade the bounce long.

It is the second day in a row where the DP has been broken, then tested and then provided a profitable entry.  We really should be well up in what has been a tricky week.

 Context
Yesterday’s bounce caught everyone by surprise and it will be interesting to see how long it can last. Really the notion we will set up a bail out mechanism, call it a bank, lend it the money we can’t constitutionally lend to countries , and have it lend it to countries does seem a little like straw grasping for the Bulls. We still have the situation where bad news pours out on the Euro and yet the moves down are measured and we are basically where we started on Monday.
Watch out for ECB President Draghi Speaking this morning. Amy comments about the banking license could cause price to bounce around.

Technical Analysis
We have the Daily about 80 pips below the Weekly pivot and once again buying in the Euro serves little purpose other than to open up better shorting opportunities.
The 4H chart is currently has a lower low and a higher high. Its  a decent approach to wait until we have either a lower low and lower high to go short or the opposite for long. I will however look at some other options here.
With price having tested the DP from above we are now looking for a price action lead. WE need a higher high (with some aggressive buying), followed by a lower high to enter long.

The Day Ahead –
It will be fascinating today to see the rally in the Euro can continue and if so for how much further. The Daily Pivot has been tested which open up the long trades, and has been pulled back towards the weekly which encourages the short option. Today will be about price action and watching the highs and lows.
Bias- My overall bias is still short, more strongly short than it has been.  1.2000 will no doubt provide strong support and I will grab profits before that level. I feel as if at some stage this might just drop.
NO TRADE:
Short entry: If the pivot is broken, I will look for a test of a resistance level (especially the pivot itself) and be I short.
Long Entry: WE have had a test of Daily Pivot which open s up the possibility of trading long to our 1.2174 resistance area. WE first need to see some aggressive buying and a higher high, followed by a pull back. If the initial buying isn’t aggressive I wouldn’t trust the move. We need to remember trading long in the euro requires risk, and we want to be out of the trade reasonably quickly. If price stalls for a bar, try and bank some profit.

 RED News Today GMT
10:30am    EUR     ECB President Draghi Speaks
1:30pm     USD     Core Durable Goods Orders m/m 0.1% 0.7%
1:30pm     USD     Unemployment Claims 381K 386K
3:00pm     USD     Pending Home Sales m/m
All the best
PBT