Daily EUR/USD, GBP/USD Analysis October 3rd 2013
The EUR/USD saw a nice run up thanks to Super Mario yesterday running for over 100 pips from low to high. I did take the short I was talking about in yesterdays commentary from 1.3534 and got knocked out break even when then ADP non farm data was released. Since the reaction seemed unwarranted on Draghi really not saying much I also took an aggressive BS news trade short from 1.3597 but closed it manually after the pullback didn’t materialize after an hour and I wasn’t going to hold it over night without getting the stop to break even. No gains on the day but also no losses so over all a good day.
Today I will not have a bias on direction and wait to see where they show some conviction. I will say there is the nice topping formation but we also have a couple hourly closes above Tuesdays highs so going with either and forming a bias for today is risky. If we get the hourly close below 1.3575 during London today I will look for the short and the inefficient move retraced. I will also be willing to take the short on a stop run to the highs but if we get the close above I will close and look for a trap to go long from. Otherwise if it can make a push to test the highs during Asia this morning and we get the stop run to 1.3575 during London I will be willing to take the long with some clear trapping going on there. All the while watching that hourly close of course.
The GBP/USD has remained inside the range of the first push down on Tuesday leaving the question of if there was any true conviction in the first push down. Therefore I will be keeping an open mind on this pair today also. If the Euro breaks up then this pair will likely follow to some extent but if this run to the upside on the EU is fake then the GU will follow unless something drastic happens to the EUR/GBP.
The best level to short from will be 1.6249 with a stop run but with the daily high just above at 1.6258 they may just push it above there if its worth the money to get the stops above. The best level I see for the potential long is 1.6190 where the break down for the potential false first push ending during Asia yesterday. The thing is if they ran the stops below there and made the effort to induce shorts it has a good chance of holding with the proven support during the New York/London overlap. If there are stops they want to get the orders stacked that is the best place to get them.
Forex News Today
Todays calendar starts off with services PMI data from Italy, France, Germany and the Euro Zone but these are all low impact and shouldn’t do much without very large misses. However the UK also has theirs which with the UK being a service based economy has much more potential. Expectations are for a small drop but with the Manufacturing data being such a large miss this has the same. Its not like the service and manufacturing sectors are connected but if there is that much of a slow in manufacturing it could be a sign of the same problem in the over all economy as well. We will see.
There is also several 10yr bond auctions from Spain, France and the UK and even though they show as low impact if they go bad the Euro and GBP should suffer.
The US has Thursday Unemployment Claims expecting a rise and if it does miss I expect the chance for a worse rather than better figure has the higher probability. Later in the day Fed Member Fisher speaks and being the main hawk at the Fed, if he changes his stance then even though he is not a voting member we will likely see the USD weaken. Its hard to say.
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This may go on for a Long Time
Yesterday I watched the latest Max Keiser episode and he had a guest who is a very well known economist in Australia who had some very valid points about how long the print fest and other funny money charades could and probably will go on for a long time. Using the example of Japan it was enlightening to some degree. however like I have mentioned in several commentaries before this will go until it simply cant and once one of the big boys loses trust and starts to cover his own but (a lot like the movie Margin Call) things will go south very quick.
Another Gold Beat Down
I just had to share this one too. This is an interview with Ron Paul discussing the cluster ____ we call the US government but what really made me laugh was when they discuss the slam in gold the other day saying it was one fund (or what have you) selling well over 2-3 million ounces of gold. Of course any interview with Ron Paul is worth a listen but this was funny. Enjoy
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