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Daily Forex EUR/USD, GBP/USD Commentary December 17, 2012

At this point it would sure seem like the deadlock over the US fiscal cliff has created some significant USD weakness across the board. Combined with the Fed effectively doubling down on asset purchases, I don’t see this changing anytime in the near future. This is definitely not a risk appetite scenario with the S&P dropping 3 days straight last week. Maybe, just maybe we will actually start getting back to the old new normal and the markets trade a little more normally. I have to say I doubt it though. 

The EUR/USD made the extended push up Friday testing a significant daily level with little rejection at the end of the day. This morning during the Asian session its made another attempt at breaking it and did have an hourly close above however now has produced a nice set of reversal legs on the hourly chart. This increases the probability for a deeper pullback before they will most likely break that daily level and make the next push to the upside.

Today I will be looking to see the test of either the 1.3136 level where the 15 minute chart found some resistance on the move up Friday, or the test of the break out level around 1.3118 before the second overall push up.

I did manage to catch the long entry for 74 pips Friday. I was talking to a member on Skype when he asked if I had taken the Euro short. I didn’t and I am sure there are members who know why 😉 Since I was leaving my desk to run some errands I set a pending order 3 pips above the Asian lows. Once I came home the market had already moved up nicely and was approaching the ADR. Being that it was close to my bed time I just closed  manually when I saw some selling coming into the market at that level. I was also happy to hear the member I was on Skype with caught it to. Good job Bryam. Here is what he sent over Skype Saturday morning. “Chad I gotta say you are a genius I took the EU long towards the lows W formation got my first trade of the week up 50 pips! Have a good weekend  buddy”.  I will cover this trade in more detail in the live London training session. 

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1 hour chart of the EUR/USD on Dec 17, 2012

The GBP/USD has shown us a false push down confirmed by the first push up. What makes it more convincing is the hourly close above last weeks highs. It was small but still significant enough. It would still qualify because of the hourly close above Thursdays highs but I would be a little hesitant without a break and close above Wednesdays highs.

This pair has already tested the break out level of 1.6151 so there is a possibility that we don’t see that again today. Having said that if it cant make the break during the Asian session they will most likely do a stop run or trap at that breakout level before the push up. There is also a break out level at 1.6141. I will be looking for the trap at that level as I think they run it there to try and push weak holder out of the market before the move to the upside.

1 hour chart of the GBP/USD on Dec. 17, 2012

Forex News Today

Scheduled news is light as is typical for a Monday. There is nothing coming from the Euro Zone so we should see more price action based movements barring any tape bombs. Since there was a lot supposedly accomplished last week I have doubts they will be stirring the pot today. There is a Mario Draghi speech late in the day but since he hasn’t been doing his typical Euro pump and there has been some nice bullish movement I don’t expect much from him

The US has Tic Long Term purchases expected to rise significantly from the massive miss from November. I don’t see any reason for such a jump but it could happen. With the political crap going on in the US along with Bernanke fulfilling his promise to print the USD into oblivion there is really no reason for foreigners to invest in the US at this time. I wouldn’t be surprised to see that go negative but that’s just me.

There is some Fed speeches late in the day that could spark some movement.  

Happy Trading


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