We are still making lower lows and lower highs.
We had a severely oversold market that was ripe for a massive short covering rally which we have had.
I am suspicious about the catalyst for the rally and its proximity to Friday’s NFP data which the cynic in me now thinks will be catastrophically awful.
Flushing out traders who are short is a neat trick but it is only buying time. Just like the ECB’s longer USD loans to troubled banks bought a little bit of time.
I will be getting back into the short side before NFP having covered half shorts at 1086.5 and the rest at 1115 I am hoping for somewhere near 40 but we may not get that high.
This hourly chart tells many truths
It showed we had divergence on the RSI.
It showed massive volume on the lows and with the rally we have declining volume.
It shows we are sitting on trend resistance, which at 1140 will be classic selling territory.
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