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Daily Fx EUR/USD, GBP/USD Commentary June 26, 2012

The EUR/USD did as expected and made the next push to the downside yesterday. Looking closely at the chart at this point I do see 3 intraday pushes from the highs for almost 300 pips over 4 days and now I am figuring a reversal may be the higher probability today. We are seeing the bottoming formation start to form on the 1hr chart and are now testing the break out level from Fridays lows last week. This would also agree with a fundamental view that there will likely be some short covering going into the next EU summit in coming days. Even though the likelihood of them coming up with a grand plan to fix everything that is wrong with the Euro is just about zero. The smart money holding on to shorts through this meeting doesnt seem to be likely.

Today I will be keeping an open mind on direction but slightly favor a long. If Fridays lows can be broke during the Asian session by a decent amount I will start to look for the manipulation there today during the London session but I will be more comfortable if I see the manipulation at the Asian range lows or yesterdays lows will be even better. If I do consider a short it will be at yesterdays highs. The fact is there could and should be an overall larger down move in the making but I have my doubts it will happen ahead of the EU summit.


The GBP/USD is in pretty much the same scenario with a series of 3 pushes over 4 days. As with the Euro it is possible that a longer term down move is still in the works we still can make pips on the pullbacks if we get good entries. Even though a short covering scenario may not be the driver of an up move on the GBP. If the USD does get weak the move on the GBP should be the larger move considering the potential and more than likely weakness of the Euro. Meaning the EUR/GBP has more potential to hold steady.

The same is true for the GBP/USD entries today as I will be trying to keep an open mind while slightly favoring a long. I would feel most comfortable with the long at the lows yesterday on this pair but there is a chance that Fridays lows could hold it also which is where I will be looking first for a clear sign of the trap move. As with the Euro there may be the longer term push to the downside in store.

Forex News Today

Scheduled releases are light today starting with the GfK German Consumer Climate that isn’t a high impact event but a big deviation may give reason for manipulation. Then from the UK there is Public Sector Net Borrowing and the Inflation Report Hearings. The Public borrowing is expected to rise sharply from the previous numbers which should be negative for the GBP but a sharp rise in borrowing from the public may be seen as good as people who are willing to borrow have an optimistic view on the economy. I dont think the Inflation hearings will be a big mover as inflation in the UK is dropping but still above comfortable levels and thats what I expect to be said.

The US has S&P/CS Composite-20 HPI y/y that is still expected to show housing is not really recovering. Even though it is expected to improve slightly it shows that the drop in housing prices has not bottomed yet and unless we get a surprise which I doubt this shouldn’t be a market mover. Then the CB Consumer Confidence figures are later and are expected to drop showing Americans dont have such an optimistic view on the economy which should be no surprise but a large deviation to the downside will be USD negative.

Happy Trading


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