EUR/USD Possible move to 1.3020?

Big day for risk assets today, looking at EUR/USD futures, we note that Low Volume Node (LVN) at around 1.2780 area which is a major resistance area. So from this we are definitely  still bearish on Euro as long as we stay below that level, but we cannot rule out a move higher if we break above that considering the market has parred back significantly on Short positions. We would be looking for a move into the 1.3020 area which is our next LVN if we get a daily close above that 1.2780 area, but I would make sure ACC/DIST confirms a break of resistance area before taking long's.

Buying USD/JPY Sept 84 Calls

Over the last few days I've been making a case for bullish USD and short risk plays. One of the ways I was looking to play this was through USD/JPY options. Just a quick and simple analysis here of the chart shows break higher above 21, 49, and 89 EMA's and clean break of this downtrend we've been in since mid-March and our 50 Period CCI reading just poking above 0. Also we see that 79.00 level playing a big role as support/resistance since Nov. that seems to be holding as support here. Thus, I'm looking for a move higher here back to the previous high's, so Sept 84 Calls trading at about 9.6% vol looks quite attractive giving us just over 3 months to see USD/JPY rally.

S&P Futures Chart

Just a quick analysis on SP futures here. Looking at a daily chart, we have a nice rejection off the 61.8 fib level which comes in at 1354. This is in-line with our analysis on Dollar Index and EUR/USD from yesterday and today that is supportive of a bearish view on equities and risk overall, however notice the ACC/DIST indicator (market breadth) is still above its prior resistance which is now support. This is the only thing that's stopping me from outright taking a short position on risk, once that breaks lower, I would be more comfortable with the idea of outright short risk assets, whether it be commodities, currencies or equities.

Expect Dollar Higher and Risk Lower

Today we look at a Daily Dollar Index Chart now that we have FED day over and there are some interesting developments. Just like the EUR/USD chart I put up yesterday, we see that Dollar Index spent the last few days  under that major 81.80 resistance level, but as I pointed out in the EUR/USD anaylsis yesterday, that seems to be misleading. As we look at our ACC/DIST (market breadth indicator) we clearly see that recent price action has been decidedly above prior resistance despite price action telling us otherwise. With this in mind, it would be supportive of a bearish view on risk assets and I would be looking to continue fading moves lower on Dollar and considering selling risk assets against it (Commodities, EUR/USD, Equities).

Fake Risk Rally?

From the FOMC meeting today, risk rallying on that anticipation of QE3,OT,etc..., commodities near yearly low's, to the inverted head & shoulder patterns on just about every risk asset I keep getting in my inbox, a market bottom sure seems possible here. So taking a look at Euro this morning. I noticed something interesting. Looking at Price action alone, it looks like we've pushed back higher above that 1.2620 prior resistance and would indicate a move higher into 1.3000 area (next major resistance area), perhaps even that 1.3170 HVN on daily charts. But looking at ACC/DIST we see a very different picture, we see that this move up higher isn't supported by any real volume and ACC/DIST remains below it's prior resistance level. This would lead me to believe that this rally is a false break (dead cat bounce, short squeeze, whatever you want to call it). I would be looking for that 1.2880 LVN area to bring in a fresh wave of sellers and Euro and other risk assets for another move lower towards yearly low's of 1.2300 area.