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Nice Little Bear Squeeze

Nice Little Bear Squeeze

by The MoleJanuary 30, 2012

Well, that was a nice little bear squeeze we got ourselves today – almost textbook I may add, featuring the early morning wipeout followed by a systematic run higher. If you paid attention to the charts I posted last week then this morning’s support zone should have come to no surprise to you:

Those two Net-Line Sell Levels (NLSLs) at the psychologically important 1300 mark proved too much to overcome, which frankly was not a big surprise to me. There is simply no confidence in the tape – one way or the other! For the entire month of January I have maybe seen one or two quick spikes beyond the Zero’s +/- 1.0 signal range. A twenty handle drop at the open usually comes with a bit more juice to the downside and lack of participation/momentum simply means that the tape can turn at any moment – and that’s exactly what we got.

If you are wearing your bear hat then please don’t get your panties in a bunch until we see a breach below 1285 – or even better 1280. Now that could open the door for a more pronounced correction, but until I see that happen let seasonality, momentum, sentiment, etc. be damned! 😉

But I really don’t care that much for equities right now – not until we get a strong move in one direction or the other. The FX side is a lot more juicy IMNSHO – very very nice setups today:

AUD/JPY – similar pattern as the spoos but there is a whole cluster of support sitting below plus we have a rising and fast encroaching 25-day SMA which should be good for some support. I would watch out for a breach of the 81 mark – if we get that plus a push above the 25-hour SMA then say hello to 81.80.

Alright the best ones below for my intrepid subs:
[amprotect=nonmember] More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
[/amprotect] [amprotect=1,13,9,12,5]

USD/JPY has fallen from grace in a huge way and is now scraping support. I would love to see a touch of the 76 mark at which point I’d want to be long. Either that or a breach above that 76.42 hourly NLBL – not sure we’re going to get that one that one though as we’re running out of time.

Next runner up – USD/CHF – excellent excellent setup. Because either this is a last kiss goodbye (i.e. shorting opportunity before a drop) or we make it above those hourly buy Net-Lines plus that 100-hour SMA and we are golden to the upside. Play this sucker either way but be disciplined with not jumping the gun too early.

EUR/AUD also at an inflection point – it’s been taking its merry time but we do have a bonafide floor pattern here. I’d be long above 1.25 – assuming it can overcome that 25-day SMA plus the NLBL it’s pushing its head against right now. For your stops consider the support on the hourly I have highlighted.

And there is more! EUR/JPY – sitting right at the 100 mark – psychologically important and it’s a NLSL – you know what to do. If this thing turns to the downside then consider that there’s a bunch of support below – I personally would only be interested in a long trade here into 102.5.

And last but not least – the NZD/USD, which bounced against a bit of resistance. I told you guys last week that this thing has the potential to keep running – the force is strong in this one! Hey – I get one Star Wars reference a month, okay? The short side is tough to trade right here unless we get some kind of RTV Sell or an inside candle. But I would be long again on a breach of today’s high with a stop below yesterday’s lows (for the lack of a better stop point – sorry, the best I can offer right now).


There you go – tons of good setups on the FX side. Did I promise too much? Happy unbiased trading (to quote Volar).


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at the usual social media waterholes.
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