When the Bulls fight the Bears, we need to sit at a safe distance 2nd July

Hi and welcome to our EUR/USD brief for today.

A critical day for a possible change of sentiment… Todays the Bulls and the Bears will fight out direction for the next few days. If you have ever seen a Bull and Bear fight you will understand we will be well advised to sit and watch form a comfortable distance. Those that get involved may get ripped to pieces….

Friday saw the Euro spike on news that the EU leaders would relax borrowing conditions for Spain. It’s the first really positive move from the Eurozone ‘leaders” and deserves the kind of support we have seen. However in the big picture it still remains the Eurozone pushing the debt around amongst itself, not reducing it all.

Context
My opinion is the Euro rally will be short lived here, and the real effect of the announcement will be to slow the recent decline. However I don’t trade my opinion I trade the market, and I understand how little regard the market has for my position. Given it will run over my position, like Jonah Lomu used to run over Englishmen, I will wait and let it pick a direction and follow behind stealing a few pips here and there.

Technical Analysis
The daily and weekly pivots have become one in a very rare event, and they are tucked in close to the monthly pivot. The pivots grouped closely are quite a strong magnet and I expect to see the Daily and weekly level tested today.
On the 4 H chart I still have lower highs and lower lows in the big picture. These leave me a little bearish and give me some key levels.  If price breaks and hold s above 1.2700 things are a little Bullish, if it gets above 1.2740 we are really bullish.

The Day Ahead –
Bias- I have to wait at least an hour into the UK session before I can trade this market, and really I should probably wait for tomorrow. Its possible every day this week we will see a clearer picture and an easier trading day. Trading on the most unclear and difficult day of the week makes little sense.
Short entry: We have a first lower high on our trading 30 minute chart,  and another lower high would give us a chance to trade down to the pivots. I would still want this to be at least an hour into the London session

Long Entry – There will be a lot of noise about longs in the Euro today but I wont be trading it long. The 1.2740 area that puts in a higher high and confirms a bullish move for me is 130 pips away from daily pivot, which would be over extended. If the market goes long today it is a critical day that sets up a change of bias for me and I will let that set up, and then take my positions tomorrow.

News Today GMT
3:00pm USD ISM Manufacturing PMI 52.1 53.5

All the best
PBT