Daily Analysis of EUR/USD, GBP/USD April 10th 2014
The EUR/USD managed to make the clear third push yesterday waiting for the Fed Meeting Minutes to make the final move. From what I can see there were many members who thought the timeline for raising interest rates were misunderstood and felt they should voice their opinions that rates will be low for a very long time. If history tells us anything we are reminded that the Fed gets it wrong almost all the time. For example Bernanke missing the housing bubble that created the mess we are in. The list goes on but would take a book to name them all. Not that it matters all that much for us but does show they either have no clue or are a bunch of over paid liars. Most likely the latter.
With the third push coming into a significant daily level at 1.3854 I will be looking for the reversal today. Having said that the potential for them doing a fake out to the downside before they start another run up is there since the Fed let the cat out of the bag wanting a weak USD. My preferred short will be from the highs with a stop run to the 1.3862 level and if that doesn’t happen early in the London session I will be open for the long starting from 1.3822 but will prefer to be short and taking profit there or just below at 1.3800. If for some reason we get the conviction above the highs during the London session I will be open for the long at the Asian lows or yesterdays highs depending on the move.
The GBP/USD also saw it fit to push higher yesterday also showing conviction rather than any effort to push out the weak holders on the way up Tuesday. This tells us something significant which is the fundamental picture considering the GBP is stronger than the desire to manipulate and they will make money on the rise rather than worry about weak holders taking profit on the way up slowing the move. having said that this pair is coming up on some very significant levels. At 1.6820 sits this years high and just above at 1.6872 is a monthly high from 2009 with that years high just 165 pips above that.
All things considered I will be open for either direction on this pair today. Right now we are getting the Asian push upward which could be a fake out for the reversal but if the 1.6820 doesn’t get much reaction then they will probably break that during London and go into extended pushes here. If we do get the conviction above there during London I will be bias for the long looking at the Asian lows or yesterdays highs for the manipulation. Otherwise I will be open for the short at the Asian highs but will want to see the typical playing of the breakout traders to add confluence.
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Forex News Today
The calendar starts off with the ECB Monthly Report. This could be interesting depending on what they were looking at to make policy decisions. With Weidmann seemingly more open for full blown QE there could be a shift coming. However I would expect they will need much more ad data to actually make the move. If there are no significant changes it will be a non event.
The UK has the BO rate decision and Asset Purchases today. With the way things are going for the UH right now there is a slight chance they fudge the Asset Purchases but I highly doubt they will. The GBP is strong enough without it and they probably don’t want to cause a spike. This will most likely be not much to look at either but has a chance to surprise.
The US has Thursday Unemployment Claims but barring a big spike I doubt it will have much effect either. With the Unemployment data more or less a joke these days they don’t even mark it as high impact on our calendar any more. The potential for it to disappoint is higher but will most likely be close to expectations considering there hasn’t been much news about companies planning to lay off workers. I will keep an eye on it if I am in a trade though.
The Asian session traders have some big releases for tomorrow as well. The BOJ meeting minutes along with Chinese CPI data could move the Asian market pairs if they surprise. As usual the Chinese data can effect the Aussie while the Yen will move significant if the BOJ pulls something out of their hat.
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