Daily EUR/USD, GBP/USD Analysis October 8th 2013
The price action on the EUR/USD yesterday shows that they will most likely not be pushing the pair until they see something from the US government. The way I look at this is there are two higher probabilities that have potential to unfold. the higher of the two is they make a last minute deal to keep the US from defaulting in which case risk will be back on and things continue until what ever conditions they se for the deal (think sequester) kick in. Since the last sequester deal really didn’t do much economically like they expected when talking about the fiscal cliff. I expect close to the same happening but probably more effective in slowing the US economy since the deal will be cutting a bit deeper than the previous ones with the sequester deal.
The second scenario they default. This seems to be closer than some might believe if we take Boehner at his word in the video in yesterdays commentary. The republicans hold out, along with Obummer holding on to his position unwilling to postpone Obamacare for a year or more. If they do default then its not going to be as catastrophic as they say I am relatively sure. Will things get funky for awhile? It sure will but it seems that in order to break the status quo something drastic needs to happen because the ones that are benefiting most from the way things are want to keep the party going. That’s the only way they can suck as much as possible before things change for the better of the people they have been profiting off the backs of. In other words the situation must get worse before it can get better, the people are waking up and I believe this will be the best opportunity to get the US back to something closer to the principals the country was founded on. Having said that I will also say that it will depend on the people fighting for what they believe in. Not necessarily violently but definitely getting together and kicking out those that benefit from the status quo.
On to the charts. The best trade I see on the EU is the short from around 1.3588 or the long from the lows around 1.3542. We do still have a push down so I do have a small bias for the short still but the longer it stays in this 50 pip range the less probability they the plan is to continue and get the second push. If it cant break out today then I will be open on direction tomorrow.
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The GBP/USD has seen a reversal for a first push to the upside. If they do intend to make the second push here today it will most likely drag the EU with it to some extent. This first push is rather clean with three short term intraday pushes so considering they never do the same thing twice if they make the second push up it most likely wont be so pretty. The best level I see is 1.6057 due to the proximity but if the 1.6073 level holds and they play the break out traders to the highs first during London then the Asian range lows come into play which are just above 1.6073 right now. There is the small chance for the short trading against this push but I will want to see the stop run and test of the 200 ema from below. Of course if they cant hold it back its going up to most likely test the break out at last Thursdays lows.
Forex News Today
The calendar is light again today with only German Factory Orders during the London session. Expectations are for a rise into positive territory but with the large miss on the previous release the potential for the same this time around is there. This piece of data has been rather volatile lately so be careful around the release.
The US will be void of any significant releases other than from the Fed due to the shut down but since the Fed is the only data paid much attention to lately it will be interesting when the meeting minutes come out tomorrow.
A member of ours sent this video to me this morning and I had to share It with you all. I have heard similar stories but this Dr. Willie puts it in a way that is colorful to say the least. The thing to remember is that although he is expecting something soon I have my doubts mainly because of how much effort by the big boys trying to keep it together. I should also mention that there is the Bretton Woods Meeting tomorrow Oct 9th that I am relatively sure they will come up with something to duct tape it together for some time. I am pretty sure this guy is correct and I have been saying for a long time that the end game will be the bond markets going bizerk so it is possible but the way I saw it this should have happened years ago and was wrong about how much effort they would put in keeping the correction from coming. Enjoy.
Also for members go to the members section here and check out a video posted on the algo traders and guy in the back room that tells them how to program the algo to push price to a certain price to get stops. Good stuff and thanks to Kev for posting it and thanks to Muriel for sending the video this morning.
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