Plenty of options in slowly drifting market

Hi

I have to say it’s nice to be back writing this at my own desk with the comfort of everything I need being close by.
Yesterday was a typical UK public holiday with volatility well down and a range for the day of around 50 pips. This morning we have already seen a little look to the downside when price has tested the weekly pivot and yesterday’s Support 1 level, before bouncing.

Context
There appears to be ongoing discussions about Greece’s continued membership of the EU with comments from any of the involved parties likely to bounce price away. We also have the increased possibility of QE3 in the US offering a potentially weaker US Dollar. The market is largely on hold while it waits for the speeches on Friday of the chairmen of the Federal Reserve (Bernanke) and the European Central Bank (Draghi). If My Bernanke starts Quantative easing Version 3 in the United Sates on Friday this will be good for stock markets and bad for the US Dollar. US dollar weakness would see the EUR/USD rise.

Technical Analysis
Daily pivot is pulling back towards weekly Pivot in a sign the market is consolidating. While Daily Pivot is above weekly pivot it is Bullish overall, but the fact Daily Pivot is falling does suggest some momentum down against the overall move.
The charts show a lot of Wedge or symmetrical Triangle type patterns. This is normally a sign of indecision and looks to be the case again.
The 4H char offers little clarity to help.

The Day Ahead –
With the market expected to stay in the range and be a bit choppy we are looking to be in and out of the market reasonably quickly. The longer we sit in a trade the more risk that we take of a one of event stopping us.
We know that the EUR/USD tests the pivot 80% of the time. This offers an immediate trading opportunity at a risk of about 1-1.

The pair is especially vulnerable to surprise news at the moment and still needs some caution.
Bias- My overall bias is still short, but I need to wait for some evidence.
 NO TRADE:
Short entry: WE seem to have a number of options for short entries. My favorite is the bounce off DP. I would suggest a tight target of even the Support level of 1.2482 as we don’t want to me in the market to long between Daily and Weekly pivot.
Another option is a break and test of WP, while unlikely this would provide the possibility of a bigger move and better profits.
 Long Entry: WE have the current long option where we trade it back to the trendline. Target about 18, stop about 22 on my charts. My favorite long would see a break of the Resistance trendline and then an A-B-C entry long. Again a conservative target of 1.2535 would do me.

News Today

USD CB Consumer Confidence


All the best
PBT