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Daily EUR/USD, GBP/USD Forex Market Commentary October 24, 2012

We have seen the second push on the EUR/USD we were expecting for Mondays commentary. Even though there were the three intra-day pushes down they were all together only 124 pips. My thoughts that this was just the first push of a larger three push down and now we finally got the second. Today I will only be considering the short expecting the third. Since this larger move is taking more time than a normal weekly cycle we look for there is the chance that we see the chop for a day again as the smart money tries to push out any weak holders of short positions.

The best place to see the manipulation will be the breakout level of 1.3012. However that price being around 40 pips away right now I would expect some of that to be eaten up during the Asian session. The hourly 200ema is not far above that level around 1.3020 so that is another possible place for them to try and hit stops.

As we were discussing the movements in the Euro during the live forex training session yesterday we did have a few members that caught the EUR/USD short from late Monday. I just want to say good job to you guys and I hope you held on for the full 100+ pip run. I also want to point out that during the room we were looking for the possible long trade to try and get some pips on a pullback that never set up like I wanted since it was a higher risk entry. However once we got the hourly close below the daily lows around the 1.3012 level (green arrow) the chance for the long went right out the window. Then we saw the drop for another 60 pips. I’m not saying this was tradeable but I do want to emphasize the value of an hourly close above/below a significant level.

1 hour chart of EUR/USD on Oct. 24, 2012

Looking at the GBP/USD I see that the pushes are clearer and we have most likely seen the third push down. Considering the ADR is almost 10 pips tighter on the GBP/USD and the fact that the second push was somewhat shy of even an 80 pip push. I wasn’t totally convinced in the yesterday’s market analysis. However now looking at yesterdays price action it does become more clear. Therefore we should see at least a small reversal here today. I do still have a slight bearish bias but I will be keeping an open mind for the long for the reversal since there is a good chance for it. The reason for my small short bias is it has broken below the psych level of 1.600 and came very close to the 1.5900 level yesterday.

The areas I will be looking for a possible long is obviously the lows from Tuesday at 1.5912. This is also a daily high from August that price made a significant breakout and will find some natural support. Any potential short position will be at the breakout level around the 1.6000 level which is just over 50 pips away right now so for you aggressive traders there is the opportunity for the long on the reversal then the short once it tests 1.6000 if it can make it there. I does have the possibility of getting stopped shy of that level since there is a daily low at 1.5988 and we all know how the GBP/USD likes to turn at them 80 levels.

1 hour chart of GBP/USD on Oct. 24, 2012

 Forex News Today

There is a plethora of news releases today as it would seem they are playing catch up since we had two dull days before. To be honest this is typical end of the month data we always see from the Euro Zone so its not all that bad. 🙂

We start off with Services and Manufacturing PMI data from France, Germany and the Euro Zone as a whole. At this point my expectations is more for the probable disappointment any any or even all of these releases. there is no sign of anything really getting better in Europe so i have my doubts there will be any surprises to the upside. We also have the German Ifo Business Climate expected to get an up tick of which I doubt also but anything is possible. Lastly there is two (yes I said 2) Mario Draghi speeches later in the day so the market will be glued to his every word. What my thoughts are is these wont be the Euro pump speeches that we are used to. He has already thrown in the kitchen sink. At this point seems like its in the process of getting it thrown back and fixing to strike him in the face.

The UK has its CBI Industrial Order Expectations expected to be slightly better than the last release but still well into negative territory.

From the US there is New Home Sales but this release comes at the same time Draghi starts his second speech so barring a major surprise this most likely wont move the markets too much.

You Have To Love Nigel Farage

Today I leave you with another great Nigel Farage video from the EU parliament yesterday when he yet again gives Van Rumpuy the what for. This is good stuff. Enjoy

Happy Trading


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  1. Lukas
    Lukas October 24, 04:54

    Thanks again for great daily commentary. I’d love to hear the rules for entering the EURUSD short from late Monday. Was it a Stop Run on Monday 16:15 CEST above Friday’s 1.3075 level with nearly engulfing candle that followed it at 16:30 CEST ? Then entry would be on 16:45 candle that pulled back to almost half of engulfing candle ? Timeframe I am looking at is 15M.

    Reply to this comment
    • Sterling Suhr
      Sterling Suhr October 24, 06:10

      Hey Lukas,

      Yes that was the reason behind the short. That was the deeper manipulation point we mentioned in the members daily market review. The reason we expected that level as the second point the move down might start from is because of first and foremost the cycle being to the downside at that point. After that we were looking at that level because there was the most amount of short term response around that point from a S/R perspective.

      If Smart Money wants to short the market they need to trigger buys. A break above the 1.3080 level was where we felt the retail stops would be. Thus by breaking into and above that level and then quickly getting rejected back down out of the stop area this gave us the indication that the stops had truly been takin and the market should move down from that point. The key is the quick rejection. If you pick a level as the probable manipulation point and then the market hangs out in that level more than likely that was not a true stop run. True stop runs are marked by quick rejections away from the expected level.

      The first manipulation point we were looking for in the daily market review was the 1.3055 level. We had a nice stop run through that level as well and I took the short on the 50% pullback of large pin bar through that level as it looked like the stops were taken there initially. I ended up with a break even trade on this. Others that took this trade ended up between break even and +20. Overall a nice response to both levels. Hope this helps.


      Reply to this comment
  2. Lukas
    Lukas October 24, 09:07

    Thanks a lot for the exhausting reply. I also took this trade myself on 1.3055 even though I ended up with -20pips loss afterwards. My fault, I was not watching carefully 1H reversal candle that happened later after which I got soon stopped.
    Anyway this is the best forex education site I ever encountered, really. By reading all articles and videos on the site, I’ve learned more useful stuff in 1 month that I did in last 5 years. Keep up with this outstanding job.

    Reply to this comment

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