May 072013

6E 03-13 (1 Min)  2_7_2013

2/7/2013 ECB Minimum Bid Rate (0745 EST)
Forecast:  0.75%
Actual: 0.75%
Started @ 1.3570
1st Peak @ 1.3578 – 0746 (1 min)
8 ticks

Reversal to 1.3542 – 0817 (32 min)
36 ticks

Extended Reversal to 1.3374 – 1052 (187 min)
204 ticks

Notes:  The ECB decided to leave the Minimum Bid Rate unchanged at 0.75% in line with most economists expectations in the face of a possible but unlikely rate cut to 0.50% and had little to say as the rates were released to move traders.  As it was trading close to the HOD, it spiked long for only 8 ticks, crossing the R2 Pivot, then quickly retreated, as the overbought sentiment set in with nothing optimistic from the initial ECB news to stanch it.  With JOBB, your order would have filled long at 1.3570 with no slippage, then offered you a brief opportunity to take a small profit or break even as the :31 bar expired.   The reversal took over quickly diving below the major SMAs for a total of 36 ticks in about 30 min.  After it drifted sideways, the press conference caused a much larger bearish move when the limited bond buying program was changed to open ended.  This caused nearly 3 hrs of selling in a downward fan for another 168 ticks.