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Bulls Capitulate in Early June, Bears in Late June

By , Sr. Technical Strategist
29 June 2012 13:30 GMT

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I didn’t expect the rally we saw today but such moves are often a surprise. As mentioned yesterday, “the only thing keeping me from getting aggressive on the short side is that weekly seasonality tendencies favor a Friday high with the Monday low in place. I am short the AUDUSD but not as short as I want to be.” Phew. Here we are at new highs for not just the week but the month (monthly seasonality does it again…6/1 low to 6/29 high). This move does nothing to alter the bigger picture (bearish risk trends). In fact, the move may be a blessing to bears that were worried about the market getting away from them on the downside.

Think back to early June. Bulls capitulated after the awful NFP release on June 1 and the USD hasn’t traded higher since! The current situation is the exact opposite. CME volume (see charts below) is suggestive of capitulation by bears as ‘Europe is saved’ for the 20th or so time in the last 3 years. I’m not buying it.

“THE MARKET(S)” a.k.a. “RISK” SNAPSHOT - 60 Minute Closes

Bulls_Capitulate_in_Early_June_Bears_in_Late_June_body_all.png, Bulls Capitulate in Early June, Bears in Late June

Prepared by Jamie Saettele, CMT

SPX 500 – Daily Bars

Bulls_Capitulate_in_Early_June_Bears_in_Late_June_body_spx.png, Bulls Capitulate in Early June, Bears in Late June

Prepared by Jamie Saettele, CMT

EURUSD – Daily Bars

Bulls_Capitulate_in_Early_June_Bears_in_Late_June_body_eurusd.png, Bulls Capitulate in Early June, Bears in Late June

Prepared by Jamie Saettele, CMT

AUDUSD – Daily Bars

Bulls_Capitulate_in_Early_June_Bears_in_Late_June_body_audusd.png, Bulls Capitulate in Early June, Bears in Late June

Prepared by Jamie Saettele, CMT

Euro Futures (CME) and Volume – 60 Minute Bars

Bulls_Capitulate_in_Early_June_Bears_in_Late_June_body_eur.png, Bulls Capitulate in Early June, Bears in Late June

Prepared by Jamie Saettele, CMT

Red bars indicate that at least 66000 contracts traded for that hour. Volume for the hour that ended at 9 am est is the highest since the hour of the low on June 1.

Australian Dollar Futures (CME) and Volume – 60 Minute Bars

Bulls_Capitulate_in_Early_June_Bears_in_Late_June_body_AUD.png, Bulls Capitulate in Early June, Bears in Late June

Prepared by Jamie Saettele, CMT

Red bars indicate that at least 28000 contracts traded for that hour. Volume of this magnitude has indicated short term pivots throughout June.

To contact Jamie e-mail jsaettele@dailyfx.com. Follow me on Twitter @JamieSaettele

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Jamie is the author of Sentiment in the Forex Market.

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29 June 2012 13:30 GMT