Analysis of EUR/USD, GBP/USD July 9, 2013
The EUR/USD has made a 70+ pip reversal for a lackluster first push at best. It seems as though the effort to push out shorts didn’t really go that well. I would have expected a stop run above the 1.2900 at least if there was any real conviction in a reversal or they were able to actually scare out the traders already short for the last 3 pushes down. Since we do have the reversal we expected in Mondays commentary the safest way to treat this is a third push chop and wait for the extremes for a stop run in either direction.
I do have a sneaking suspicion that its going to turn and make a test of the lows at least. Maybe its just because I am holding a short on the New York Reversal yesterday but it was a darn good set up and I also got a great entry at 1.2866. I was happy to wake up and still be in since I had to leave the full stop over night. At the time I almost just closed it since it was hovering around my entry price but after looking at the price action I gave it a chance to go and so far happy I did since I am almost to my move to break even point.
What I will be looking for to give me a clear direction is an hourly conviction close beyond either yesterdays high at 1.2880 for a long or 1.2838 proven support level for a short. Of course providing I am out of the current short position I am in. Otherwise a stop run to either yesterdays high or low will be a potential entry which is why I will be strongly considering taking profit on this short if it can make it to yesterdays low.
The GBP/USD also made the reversal we expected as the higher probability yesterday with a move of over 100 pips for a nice intraday push to the upside. This proves that the 3 pushes I marked on the chart yesterday was what they were trading off of and now we have the third push chop scenario as with the Euro today so direction is questionable. The hourly close below the 1.4916 level will add to the probability they will test the lows but breaking them are a different story so the stop run to the lows will be valid for a long and the same for a short at the highs yesterday.
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Forex News Today
The calendar is light again today with only some decent scheduled releases from the UK with their Manufacturing and Industrial Production. While both are expected to improve on the monthly figures they are also expected to be rather negative for the year on year numbers. These will probably only be used to manipulate since the UK economy is service based and manufacturing is a smaller part of the economy. having said that I don’t expect much movement barring a large miss in either direction.
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