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Daily FX EUR/USD, GBP/USD Commentary September 26, 2012

Yesterday turned out to be a rather interesting trading day for me. Even though the live training session was quite boring and I ended up jabbering about the crazy things going on here in Asia between Japan, China, the Philippines, Taiwan ect. The list goes on.

I did end up taking the short I mentioned during the room from 1.2915 on the Euro and it moved off 24 pips before coming back and hitting me break even on the push up. No worries though because during the US session I managed to catch the Euro short again from 1.2859 and I am still holding it for the break of the lows today. I would be happiest to see the break here during the Asian session but as usual I have my doubts that will happen since the Asian market has a habit of holding these more major levels while the smart money accumulates before the break during the London session. Of course there is the chance I could be wrong and this level hold for another push up inside this chop we are seeing but at this point I think its worth the risk of giving back a bit.

My reasoning is what happened with the price action at the end of the US session. Even though we never recommend opening trades during this time it still is a rather important part of the trading day. This is because of something one of my first mentors said to us that really hit home and was a big factor in my eventually turning to finding methods that look more for the manipulation by the big players. Starting when I first began to become successful trading Volume Spread Analysis. What they said was that “anybody can trade the opening of the markets and make money but its the professionals who close the market for the day” The question now is why the US session is most important. Its not because there are not pros closing the Asian or London markets but the fact that they have to do so when other markets are going through their open. So the fact that the US market does it by them self, when the price action is not a low volume small choppy move its telling us something. In this case we are seeing a risk off scenario with USD strength  along with the S&P 500 doing the same. This is why I am willing to risk some of the profit on this position to give it a chance to break today.

If I dont see the break during the Asian session and I do get stopped out with less profit I will be again looking to short from either the 1 hour 200ema or reenter around yesterdays highs on a 1hr stop run above that level. As we always mention in a third push chop scenario like we are seeing today there is more risk to taking a trade in the middle of the chop but if we do see the Asian session make the pullback and eventually close around the lows of the day there is a better possibility for London to only test the Asian highs before a break down occurs so I will be watching that close when the time comes. I should also mention that the long trade from the lows on a 1 hr stop run has its merits and trading it could gain some pips but it will have to be rather clean for me to close this and reverse the position for a run to the highs. Having said that though my bias is for the short considering all the factors put together.

The GBP/USD is showing quite a bit of the same characteristics but has a possibility of doing a test of the breakout resistance at the previous support around the 1.6214 level. We are not far from that level now so the chance of the test during the Asian session is good and as long as my theories for the risk off scenario plays out we will see that shortly. If the Asian markets cant get there then we will likely see it during London while we see the continued weakness in the EUR/GBP. On a side note on the EUR/GBP we did see the GBP/USD play a bit of catch up to the Euro yesterday and looks to have the potential false push to the upside before the retracement back lower at the end of the day.

Forex News Today

Scheduled releases are fairly light again today with German Prelim CPI figures trickling out all day and a 10 German bond auction. I have my doubts these will cause that much action but we could see an increase at the austion showing bond investors are less inclined to think Germany is as safe of an investment with the liabilities that the ECB is trying to saddle them with but the chance for that is low.

The UK has BOE Credit Conditions Survey and CBI Realized Sales but I also have my doubts these will be much more than a manipulation opportunity.

The US only has New Home Sales with hopes of seeing some recovery in housing. However as i mentioned in previous forex commentaries I dont see this happening for quite some time so this will more than likely be a non event also.

A Parting Thought

Today I leave you with a curiously funny quote from the EU Jean Claude Junker yesterday and a repeat of a video I posted from March with the comical Greek giving his take on just who has gotten the best of who in the Greek tragedy. The reason for the repost is the rumors swirling yesterday about the IMF refusing to give Greece any more money until the go through yet another debt restructure. Who is left to take the hit? The ECB and all the other Central banks in Europe that got a pass last time. This could be quite interesting indeed.

Quote Du Jour From Jean-Claude via Zero Hedge

Remember Jean-Claude Juncker? The guy who promised he would quit his unelected post in Europe’s neo-vassal imperial council, and tend to his garden or something due to the endless acrimony between France and Germany, only to clarify later he lied? Well, here he is again


Got it. Of course, this is the same guy who said “When it becomes serious, you have to lie.” It is, again, serious.

This guys is such a joke. 🙂

WARNING!! Explicit language not for young viewers 

Happy Trading


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  1. Ray
    Ray September 26, 09:19

    I don’t know what you mean today, EU never reached 1.2815??

    Reply to this comment
    • Chad
      Chad September 26, 11:02

      Hi Ray you are correct. Thats a typo and I meant 1.2915. During the room I was actually looking to see 1.2920 at least on the buy side but when I saw the no demand candle I took it on the small pullback about 30 minutes after the room closed. Thanks for the heads up on the typo. I shall have it fixed shortly.

      Reply to this comment

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