Analysis of EUR/USD, GBP/USD October 21st 2013
The EUR/USD today has no bias for direction. With an attempt at the daily highs Friday at 1.3708 there just wasn’t enough conviction to even get an hourly close above the psych 1.3700. Having said that it was the end of the week and they could easily push it further north this week still. The best way to treat this pair will be to get some conviction in either direction to form a bias and look for manipulation after that.
I still expect some sort of retracement of the move Thursday but if they do have the conviction on the weak USD they wont let it happen. In order to take the short I will want to see some conviction below 1.3655 and look for manipulation at the Asian high if this tight range holds. Otherwise I will consider the 1.3576 level for the short if they test Fridays lows during Asia and we get the conviction below during the London session. With the way things are going right now the only potential I see for the long is a stop run to 1.3655 but if I do get long I will want a good entry and watch for the conviction.
The GBP/USD also tested the next daily level last Friday. It wasn’t the overall highs but a level that held for three days at the highs and getting the rejection there along with the daily close below Thursdays highs does increase the probability for the short today. That gives us a nice daily pin bar showing they don’t have any conviction in the push up for now anyway. I will be open minded on direction on this pair today all things considered and look for some conviction or a stop run during the London session. If they play the break out traders to the lows and don’t give the hourly stop run I will look to short from the Asian highs around 1.6180 with the right set up and entry. They may push it to 1.6194 also so caution is warranted. Otherwise I would prefer to see them play the breakout traders to the high of the Asian range and then see the stop run to 1.6141 to take a long.
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Forex News Today
The calendar is slow again during the London session today. There is only German PPI figures which is low impact and will likely be a non event. Even the US session is slow with Existing Home Sales expected to have a decent drop in both the monthly and yearly figures showing that the housing market is getting worse and may just give them a reason to make the push these pairs up during the US session while equities take a hit on USD weakness. Having said that there may still not be enough conviction to break the highs on bad US data because the strong Euro hurts European economies and they are in as bad or even worse shape over there.
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