The mistress or the wife, or will the EUR/USD visit both today

Hi

Congratulation to those who took yesterday’s trade suggestion, you should have banked another winner. We waited for the market to confirm a direction by breaking the weekly pivot, then a retracement and got a nice short order off the inside bar. Our stops would have been about 15 and we should have banked somewhere between 2-4 %. A pretty good return for us for showing some patience.

Context
The market is now falling on concerns of slowing growth, especially some negative numbers out of France.  At this stage there is no sign of the expected bailout request coming from Spain. We will still be watching Spanish bond pricing and especially the 10 year bonds closely as borrowing costs push towards unsustainable levels  for the Spanish. At any time supportive news on the Spanish bailout could spike price otherwise I am expecting a slow day probably downwards day.

Technical Analysis
Today is the battle of magnetism as the EUR/USD has to choose between its wife and its mistress. The Pair test Daily pivot over 70 % of the time and this is especially so when the pivots are close. With Daily and Weekly together the pair will be drawn to the comfort of Pivots. Yet tantalizing below is the 1.2908 level which the pair have found irresistible lately and it would be a brave man who predicted against another visit to the pairs mistress.
The 4H chart still looks a bit over sold and further retracement looks likely.

The Day Ahead –  
I will have a little each way here, If price breaks the recent high I will trade to the pivot… and then look for a reversal back down to 1.2908.
Bias- I think the market will slide down, and then may spike up on Spanish bailout or bond news….
 NO TRADE:  I wont trade between daily pivot and 1.3030.
BEST Short entry; I would like to see this pullback get to DP and then give me a nice reversal bar.
BEST Long Entry; If price takes out today’s high I will trade it to DP.

Other Entries; Short if we get a sell off and then a retracement, and a reversal bar.
Long I would need to egt above 1.3033 and then extend and retrace, giving me an entry above the level.


RED NEWS Today
8:00am EUR French Flash Manufacturing PMI
8:30am EUR German Flash Manufacturing PMI
9:00am EUR German Ifo Business Climate
12:45pm EUR ECB President Draghi Speaks
3:00pm EUR ECB President Draghi Speaks
3:00pm USD New Home Sales

If you have any questions you can submit them here or email me at paul@paulbotterill.com
All the best
PBT