Orange lines= Fibonacci levels
Green lines= Channel lines
Purple line= 72EMA
Vertical white lines= 24hrs period seperator
The low of Monday is where the hammer candle is on 4h chart. Price loss volume on its way up. On the second attemp on tuesday, there where cluster of resistant lines stopped the bull, falling back down to the 61.8 fibo.
It was a choppy market for the past 2 days. No gains and no loss on both manage accounts. For a short term trade, the 2 fibo should be the levels to watch, break of the 50 fibo is a uptrend and assertive downtrend if it breaks below 61.8 fibo.
For the fundamental side. Subprime mortgage concerns is still there, the ailing Bear Sterns top wallstreet rival refuse to give aid, according to bloomberg yesterday. China stocks decline for 2 consecutive days. The expectations of US Fed holding their interest rate this week might push the dollar lower. Risk aversion to safer bonds continues. All this support the carrys unwind view.
Erratic & Choppy 48hrs
Contagion of Thoughts
The sentiment of carrys unwinding is still building up as of this moment. This has been the topic of all the information sites that I know of.
The Bear Sterns situation That I mentioned last friday, the undervalued Yen, expectations of another rate hike from BOJ, SNB pushes the repo higher last week. All this scares the shit out of me. This is the time I wish I'm not in the market.
What caught my attention is the rise of the bonds price last friday. This indicates that big players are pulling their funds out of the equities and diverting to a more safe investment-bonds. This kind of risk-avert move if continued will cause the carrys to unwind.
Carry trades will inevitably be a very important market focus for this week. Traders will need to be on high alert for comments from G8 finance officials.
Though EUR/CHF is at oversold zone right now, we might see some corrections later. Breaching above friday's highest high of 1.6638 means safe to hedge long. Bounce of the middle channel(pls. refer to the previous post chart) or 38.2 fibo means a continuation of the bear moves.
To focus away from EUR/CHF. Part of my analysis shows a good sign of going long for EUR/USD pair. A hammer candle has just formed on the weekly chart. This is not a recommendation to trade, it is just my observation. Trade it at your own risk.
