Scaring The Children 2.0

Those HFT bots seem to be more tenacious than those rebel forces in Libya today. We touched the Friday session low by the tick in an attempt to scare the children out of whatever long positions may have been left over in retail land.

And sometimes one single tick can separate two completely different markets. When the spoos descended on 1119 this morning I drew a line on the Zero chart indicating that this was the Maginot line for today’s session:

As you can see there was one half ass retest and then we busted higher toward VWAP which is probably going to be retested in the not so distant future. We need to hold VWAP today to give this thing a prayer of busting higher. However, call me cynical but I just don’t buy this sell off today – it looks very engineered and there is a divergence in one of our correlated FX pairs:
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On the AUD/JPY we didn’t even come close to Friday’s lows – so that’s a divergence. Doesn’t prevent the spoos from going into the toilet but whenever there’s a delta I usually take note. As you can see we are still a handle away from hitting a buy level, plus there is the lower border of the 100-day BB that needs to be overcome. On the hourly panel a breach of 80.34 would be a good start. The 80 mark needs to hold or this attempt to paint a floor will most likely fail.

Here are the net-lines on the spoos – hourly on the left, daily on the right. The current 1103 mark is the line of no return – it would get ugly on a close below that. Most likely we’ll see some rope pulling around the 1132 VWAP mark right now and it needs to hold for another reason – 1130 is the current NLSL and a failure would give us an opportunity to try out for 1143.5 – the first NLBL on the hourly.

Have fun and keep it frosty!

Cheers,

Mole