Analysis of EUR/USD, GBP/USD for February 15, 2013
The EUR/USD gave us the second push we were expecting yesterday. However a good entry remained elusive with the plunge directly after the Asian box closed and Frankfurt opened up. This was most likely due to expectations of the disappointing GDP figures from France and Germany but I expected the pullback with some clear manipulation that never came. As we were discussing the movement in the live training session there were questions on whether the long from the manipulation box was valid since it did fit entry criteria with 2 pins into the box. That is enough with 3 confluencing events however when I looked at it closely it wasn’t enough to think we could get a good push out of the long position. Although we can trade against a first push with some clear manipulation showing the smart money has done a fake out of sorts there has to be enough to change the small bias we have for direction. Since the second push had already started with an hourly close below Wednesdays lows the higher probability is that it will finish and it had only run 70 pips from the highs of the day. And finish it did plus a little kick in the hind end the way I see it.
What we have today is the higher probability for the third push although we do have a 200+ pip move from the highs Wednesday. What concerns me is the daily chart couldn’t close below the lows at 1.3353 so the chance for a deeper pullback before we get the third push is high also. I also want to bring to your attention considering the way the EUR/USD has been trading off intraday pushes there is the possibility for the reversal (red lines). having said that my bias for the third push is not as strong as it normally would be for a second push (expecting the third) trade. The best way to trade this pair today will be the manipulation at the key levels. The levels I will be watching today begin with the Asian highs and lows. Since there has already been a test up into the breakout level around 1.3372 that will be the first place I look for the short. if that don’t show me some clear manipulation then 1.3381 is the next best area for the short. I’m not totally discounting a long position today since it is Friday and we could see some end of week flows as they take some profit but it will take some convincing to get me long today.
The GBP/USD finished its second push if I count the highs after the breakout Wednesday and I will expect the third push here as well. considering it went into a 50+ pip chop yesterday I will be looking at the resistance at 1.5529 for the short today or possibly a stop run to yesterdays highs around 1.5540. Considering how unclear the long term pushes have been lately my bias for the push down is not as strong as with the Euro. If it does start getting higher hourly closes during the London session, preferably above Thursdays highs I will start looking for manipulation to go long from. Having said that it wont be crystal clear they intend to push it up until an hourly close above the 1.5582 level.
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Forex News Today
The Euro Zone dont have any high impact releases.
The UK has their Retail Sales figures expected to improve. If it can manage a surprise to the upside it will be GBP positive but I have my doubts it will create a sustained move.
The US has the Empire State Manufacturing Index expected to improve but still remain negative. If it can surprise into positive territory it will be USD positive as more thoughts of ramping up the QE fade. Later is the TIC Long Term Purchases that will show just how much foreigners are buying the US debt. I have my doubts this will be a market mover unless there is a big miss. Later in the day is University of Michigan Consumer Sentiment expected to improve but without a big miss to the upside this too should be a non event.
Have a great weekend
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