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Daily Forex EUR/USD, GBP/USD Commentary July 19, 2012

Not much has changed for the EUR/USD since yesterday. We are still in chop mode and testing the hourly 200ema as I type this. I was kind of kicking myself for missing the short during the Asian session yesterday. There was an aggressive entry for the short but it never gave me a decent pullback and I didnt want to risk the potential for the stop run to the highs that would have tagged me if thats what they wanted to do. No worries though I just waited for the next set up and took the EUR/USD long entry for the New York reversal for 50 pips so it was a good day.

There is good potential for the short here in Asia again today but I will need to see some trapping going on first. The hourly 200 has been getting much respect so it has a good chance of holding again today. Being its the 4th attempt at it does make me think it will be more tempting for the smart money to do the stop run during the London session so if I do take the short I will prefer to be well in profit before London opens to hold it. Otherwise I will be looking for the trap at yesterdays high for the short during London. If the hourly 200ema holds here and I dont enter I will be looking for the manipulation there first to short from in our live training room today.

The GBP/USD is in the same situation chopping for the last two days and is finding support from its hourly 200ema. I am still expecting the reversal here also but will be keeping an open mind for the long with the right entry. We are testing the recent highs during Asia just like the Euro so we should be able to use the correlation again like we did yesterday. The areas I will start looking for the manipulation will be at Tuesdays or Wednesdays highs for the short or the hourly 200ema for the long.

Forex News Today

News releases today are light starting with the Current Account figures from the Euro Zone. This is a medium impact event so I dont expect much movement from it.

The UK has its Retail Sales m/m that is expected to drop from the last release. If we do see the surprise upwards then there may be some room for manipulation and I will be watching for the set up before hand. Traders will be looking to see if the Asset Purchases are having an effect on the consumer. If not then this will be disappointing and showing that the Asset Purchases are not really benefiting the man on the street.

Later the US has its weekly  Unemployment Claims that is expected to rise by 17k which might bring in more thoughts of QE3 especially if it surprises to the upside. I doubt it will last long unless its a major surprise and I dont see that happening but it is possible. Next is  Existing Home Sales where they will be looking to see improvement in the housing market. This is the one I am watching to see the bottom of the US housing market. the fact is the reason there hasnt been any recovery here is there are way too many existing homes available and until they can get a majority of those sold there will be no recovery.

Last is the Philly Fed Manufacturing Index that is expected to be negative again but not quite as bad as the last release. This has potential to stir the QE frenzy again also so I will be watching for the manipulation around that release also if I am trading that late.

Good Old Rick Santelli

Yesterday I posted a couple videos of Rick that I hope you enjoyed as much as I did but here is another that at the end as he is talking about Ben Bernanke kind of washing his hands of how its not his job to regulate that. Watch how Rick sarcastically wants to add to the Feds mandate. Comical for sure.

Happy Trading


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