This text is from blog famous currency strategist Joel Kruger .
UNEASY CONSOLIDATION – It has been a difficult week to this point, with the market closures in the US throwing most investors off, and resulting in some uneasy consolidation. For me, the inability for EUR/USD to establish below 1.2900 has been discouraging. While my core outlook is still aggressively bearish, it seems like risks for some short-term upside over the coming sessions can’t be ruled out. Overall, the market remains locked in a multi-day consolidation between 1.2800-1.3200, and I contend we are in fact in the process of carving a fresh medium-term top around 1.3200 ahead of the next major downside extension.
See Joel’s daily forex technical analysis video:
LET THE MARKET COME TO YOU – Therefore, any overbought intraday rallies should be used as opportunity to establish fresh shorts. Yesterday, I had recommended selling rallies above 1.3000, and today I will pinpoint 1.3050 as an ideal sell entry. But don’t force anything. If the market doesn’t rally to 1.3050, then don’t do anything. Always let the market come to your levels and never ever chase. Right or wrong (0n the level you choose), if you pick a level where you want to get into the market, I believe the chances for success are much greater if you stick to your level and don’t enter the market prematurely. The discipline of patience is a discipline that the market respects and quite often rewards.
FROM STORM TO STORM – Moving on, I would warn that the return to fuller trading on Wednesday, in conjunction with end of month flows, could make for a very busy day. For the time being, I prefer to sit back and see how things unfold before making any decisions. Throw into the mix Friday’s monthly US employment report, ongoing Eurozone uncertainty and the upcoming federal election in the US, and it could get pretty wild. I would also warn that we are entering what is pretty much the final legitimate trading month for the year (November), with markets thinning out considerably in December. Markets have a tendency of breaking ranges and pushing hard in one direction or another into year end, so this could be yet another reason to look for a surge in volatility. If I see anything interesting today, I’ll let you know via Twitter (@joelkruger).