In the Jan 20th email on eur/$, affirmed the short position (sold on Dec 29th at 1.4250) but said to use an aggressive stop as the market may be entering a period of choppiness. Though the market did reach a slight new low a few days later, it has since bounced, finally taking large profits on the break above the bearish trendline from late Dec (said to flatten on intraday break, then at 1.3075 for an 1175bps gain-over 8% profit in the last month). Currently, see the market as putting a potentially important bottom (see longer term below) but there is still no confirmation that such a low is in place (still no 5 waves up from the lows, see shorter term chart at www.fxa.com/solin/comments.htm ). Also, cable still appears to need at least a marginal new low below last week’s 1.3505 low (see the Monday email) and argues that eur/$ will at least see a deep pullback (if not slight new lows below 1.2770). Want to be long but suspect there will be an opportunity to buy at lower levels ahead so for now, would be patient for a better entry. Nearby resistance is seen at 1.3325/35 while support is seen at 1.3110/20.
Longer term view remains unchanged as the market is seen as within an extended period of wide ranging/chopping (for at least a few months) as the extreme volatility since last July “calms down”. Within this extended period of ranging there is potential for eventual gains all the way back to the Dec high at 1.4715 (see “ideal” scenario in red on weekly chart/2nd chart below). However, there are no still no firm signs that a bottom of that magnitude (see shorter term above) is in place, leaving open scope for more chopping/first lower prices first. Generally best in this type of market to trade with a shorter term view to try to catch some of the nearer term swings (which can, and will be substantial) within the longer term ranges, or can fade the extremes of the larger range.
