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Daily EUR/USD, GBP/USD Analysis January 4, 2013

I apologize for the late commentary today guys. I had to make my yearly visit to the immigration office this morning and they always take a good chunk of the day. So I will keep this short and to the point so I can get it posted ASAP. Sorry no rants today 🙂

The EUR/USD has a couple alternate pushes that you can see in black and red on the chart. What I think is clearer is the ones in red as far as clarity goes. Mainly because it qualifies as a 280 pip drop and the clearest accumulation area is at the bottom of the second push (red) so today I will be keeping my options open for a bias. It could go either direction. The level I will start looking for a short is the break out at 1.3081. Or the 4 hour 200EMA at 1.3070. Any long position I consider will only be off a 1 hour stop run to the lows of 1.3018 and I will be watching close for the 1 hr close below that level. If it does get one I will be looking to close any long position at a small loss and be bias for the short.

The one thing I am concerned about with a long position is there is no real support to turn this pair on the daily chart until it hits 1.2923. However the psych level of 1.3000 may be hard to break so keep that in mind.

1 hour chart of the EUR/USD on Jan. 4, 2013

The GBP/USD is in the same sort of position except the clearer set of pushes is 2. However it has gone over 300 pips and finding support at a daily level around 1.6012. This could be the start of a bottoming formation so the reversal has merit if it can hold. The problem is the lows are around 60 pips away right now so testing that is unlikely unless we see a substantial drop during the Asian session. I will be keeping an open mind on bias here also. The first place I will consider a short is the 4 hour 200EMA at 1.6116 and I will need to see some clear manipulation since the chance for a reversal is there. 

There is also a daily break out level at 1.6059 that is holding for the time being so if we can get a push up here in the Asian session a test of that level along with some manipulation may be an aggressive entry I will take but I want to see at least 2 sets of candle patterns and a nice pullback to take the risk.

1 hour chart of the GBP/USD on Jan. 4, 2013

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Forex News Today

The London session is light with scheduled releases and only has UK  its Services PMI figures expected to remain above the 50 expansion level. My thoughts are this will only be used as a potential manipulation event if it misses due to it also being Non Farm Friday for the US. The only thing that may create a sustained move is a drop below 50 showing contraction in the services industry. Since the UK has a service based economy this will be substantial and we will most likely see sustained GBP weakness for a time. Then of course it will slow and chop until the US NFP figures are released.

NFP is expected to be at 150K which is nothing to write home about for sure. As I have said in several other commentaries the US needs to be creating around 300K jobs a month to really think there is a recovery going on. If we do see the disappointment  then there may be some USD weakness as thoughts of more QE come into the picture but my guess is the release will be close to as expected. If by some miracle we see a good miss to the upside the USD strength will continue. Probably into next week.

Have a great weekend 


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