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Daily FX EUR/USD, GBP/USD Analysis December 21, 2012

With only four days until Christmas Day I have stopped trading until after the New Year and I suggest that you do the same. The reason is the majority of the big players in the market are also on vacation from the market so the chance for wild swings on news releases can be volatile at best and nerve racking for those who chose to trade during these times. Having said that of course I will provide my thoughts and analysis for those who want to keep trading. You have been warned. 🙂

The EUR/USD is working on making the second push down here during the Asian session this morning but it wont be conclusive until we see the hourly close below the Asian session lows from yesterday at 1.3185. My thoughts are we will see it go into a chopping price action over the next days only spiking around on news from the US on the fiscal cliff negotiations. Here is the latest:

HOUSE SCRAPS PLAN TO VOTE ON BOEHNER’S TAX `PLAN B’ TONIGHT
U.S. HOUSE PLANS NO VOTES UNTIL AFTER CHRISTMAS, BURTON SAYS
BOEHNER SAYS `PLAN B’ TAX PLAN LACKED SUPPORT TO PASS
BOEHNER SAYS UP TO OBAMA TO WORK WITH REID ON BUDGET PLAN

What this means is since there wasn’t enough votes to pass the bill they will take until after the Christmas holiday to gather enough support (buy,strong arm, make special interest promises for support) so the bill will pass and will be passed on to the senate early next year. 

At this point it looks as though we will see an hourly stop run to yesterdays lows so this could be an opportunity for a long position depending on how this candle closes. Just get the best entry possible if you decide to take the long here. Keep in mind this is the Asian session and the Holidays are upon us. Be careful

The best level to be looking for the short is at yesterdays highs of 1.3292 but if there is clear manipulation at the Asian highs today during London a short around the 1.3251 level is possible.

Update: there was not a 1 hour stop run on the Euro. However there was a nice set of reversal legs on the 15 minute chart. Its a little more aggressive entry without the 1 hour chart agreeing but still there.

1 hour chart of the EUR/USD on Dec. 21, 2012

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The GBP/USD has remained in its third push chop so the safest trades will be at the extremes of yesterdays high at 1.6294 for a short position or the lows of 1.6236 for a long position. If you decide to take the trade here at the lows watch the hourly close for a sign of conviction to the downside. If it does close below I would be getting out with as small of a hit as possible.

1 hour chart of the GBP/USD on Dec. 21, 2012

Forex News Today

Scheduled releases are light with nothing from the Euro Zone today.

The UK has Current Account and Public Sector Net Borrowing. The Borrowing figures are expected to increase substantially so I think this has the most potential to move the market and more than likely be manipulation. A large miss to the dowside and it should be GBP negative. An as expected or above will most likely be positive. Its hard to say with the low volumes in the market.

The US has Core Durable Goods expected to drop and considering the housing data of late has been lack luster at best this will probably be close. There is also a few other medium impact events but I doubt they will give much volatility barring a large miss.

Happy Trading and be careful.

Happy Holidays to all and have a wonderful and prosperous New Year

Chad 

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