Daily Forex EUR/USD, GBP/USD Commentary September 4, 2012
Yesterdays price action leaves me a little sceptical on whether we will get the second push on the EUR/USD. There was a nice tight range held throughout the day until Draghi came up for his speech. I expected at least a test of Fridays highs that never came leading me to have more thoughts of this first push up being false. I am also concerned that the hourly candle that made the push to the high of the day ended as a pin bar with the continuation to the downside. Right now I am still holding a long position from 1.2573 with the stop at break even hoping this breakout level holds and can at least get in the range of my 50 pip take profit.
We do have a busy week for news with rate decisions and press conferences from both the BOE and ECB along with ADP Nonfarm and finishing the week with Non Farm Payrolls so we do have a high potential for the chop to remain until we get those on the books. the safer entries will be from the established range of Mondays highs and lows for today and most likely tomorrow also. If the Euro can manage a push above yesterdays highs I will be looking to short from Fridays highs of 1.2635 and if we do see the push down the next likely place to see some manipulation is Mondays lows of 1.2559. what will change my bias to short is an hourly close below Mondays lows. Then I will be looking for the stop run at the Asian highs to go short from.
The GBP/USD saw the same anaemic push to the upside but did have an hourly close above Fridays highs even though it was rather small and has traded below it ever since. Its hard for me to consider that a breach of the topping formation since there was no hint of follow through. We dont normally see these sort of topping formations after a first push and when we do it gives more probability to the push being false so again the safer trades will be playing the range and see if we can get a break. However the break will most likely come on a tape bomb and those are obviously unpredictable.
Forex News Today
High impact news is light today. We have Construction PMI from the UK expected to drop to just above the 50 level. a disappointment and the drop below 50 will be GBP negative and will most likely add to the prospects of more Asset Purchases by the BOE.
The US has ISM Manufacturing PMI thats expected to improve slightly and hit the 50 level. Any surprise will have an impact on further thoughts of QE. Positive and above 50 then less chance of QE. If we have a negative figure and a drop below the last print of 49.8 and QE becomes more attractive.
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