After repeated attempts to trigger our 1.2770 offers and the subsequent failure by a few pips, I went ahead and sold 2 units of EURUSD at 1.2743. Strong economic data this morning including trade balance and weekly jobless claims sparked the risk on rally. An important foot note on the jobless claims. Caution should be taken before reading too much into these numbers as 9 states did not report, thus their results were estimated and figured into the report. Also, this is a shortened holiday week so I am more than willing to fade this economic data with a long USD position.
Following the pre-equity open economic data the S&P cash index opened at around 1107 and immediately traded into our focus 1110 resistance level. The 10 year bond yield featured yesterday remained below the top of a possible C-wave correction at 2.768% following the data as the S&P poked above the equivalent high, directly into that key 1110 level.
EURUSD has likely completed the 3rd leg of a corrective flat pattern, which subdivides into a 3-3-5 structure. The final 5-wave effort in wave Y is likely complete, and if not will likely do so at slightly higher prices, but still below 1.2800. I am short 2 units at 1.2743 with stops at 1.2865 for now. My short position is highly contingent on the S&P cash staying below the 1110-1115 level. If the S&P gets too far above that level, I will most likely cut the EURUSD position and not allow the 1.2865 stops to trigger. On the downside I am more the willing to add to the position on any S&P weakness to exploit EURUSD's relative weakness. I am a stop entry seller for 1 unit at 1.2650 with a 1.2730 stop loss on that entry and a 1.2500 take profit. If that stop entry is triggered, I will also trail the stop loss on my existing short position down to 1.2730 to lock in profits.
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