Equities Bounce Back, USD Rally Slows, Jan 8, 2015
Was The Plunge Protection Team At Work Yesterday?
As I am reading through my news sources today I see that the research shows that through all of 2014 the S&P did not have a three day decline without a bounce. Of course its speculation but does seem a little strange that this would hold true on one of the worst starts to the year we have seen since 2000 and 2008. It also looks as though the statement of this being the worst start was wrong since I saw this morning that in 200 and 2008 there was a 3% decline in equities and this years drop was 2.7%, so close but not quite true. Today will give us the answer as to whether it was the PPT working their magic to stop the decline.
In my mind it only makes sense but there was the Fed Meeting minutes that did show the FOMC is rather confused at this point and could do just about anything should they see good reason. Meaning the potential for more printing may just be around the corner. They did say the potential for any rate increase before April was about zero so that essentially means they wont be moving that direction for the first half of the year and since it seems as that there is really no reason for the situation to improve the probability of moving the opposite direction, ie more QE, has risen substantially. This could also be the reason for the equity bounce. We shall see.
EUR/USD Makes Clean Push Down
With the EUR/USD making the push down into the daily/monthly/yearly support levels I have had on the chart over the last couple days shows there really wasn’t much support there. The threshold for the larger drop will be at 1.8000 December 2005 lows that would open the door for a move to as low as 1.1687 or even lower. I will have a bias for the next push down today looking at 1.1851 first. The 1.1867 is valid as well so I will be cautious and need a clean set up with the levels being that close. Otherwise they could push as high as 1.1887 before a turn. I will be open for the long with a stop run to yesterdays lows but seeing the test of the daily 1.1798 would be better.
GBP/USD Finishes Third Push
With the finishing of the third push on the GBP/USD along with the 60+ pip reversal I will be open on direction for this pair today. The best level to short from is at 1.5143 while I will only consider a long from the lows at 1.5058. Its possible they push as high as 1.5188 before they make a move lower but if they do reach there I would rather be long waiting to take profit.
EUR/JPY Forms Range After Third Push
The EUR/JPY is holding the bottoming formation it made early yesterday increasing the probability of the reversal. As I am typing the UJ is testing a significant level to the upside looking like it might have some conviction as well. Need to see the hourly close. This will increase the odds of the EJ doing the same but would be best to see it confirm with conviction as well. Otherwise if we dont get it on the UJ and both hold below yesterdays highs I will look for the short set up at 141.62 as long as the UJ and preferably the GJ agree. Otherwise I will be open for the long around 140.80 during the London session if they dont set up short during Asia while keeping in mind the safer long would be from a stop run to 140.53.
Forex News Today
The calendar today dont have much for high impact news but there is German Factory Orders that could miss big early on. Expected to go negative, if its a small disappointment it could get them running while I expect it would take a miss into positive territory to get any Euro strength running.
The UK has some housing data but I dont expect much from it barring a large disappointment. The same goes for their Rate decision and Asset Purchase Program. They will not raise rates and shouldn’t add to QE so will most likely be a non event.
The US has Thursday Unemployment and as long as it dont jump above 300k we wont get much from it either so today should be most price action based movements as long as the news events dont miss big.
Aussie traders have Australian Retail sales and Chinese CPI to watch out for tomorrow during the Asian session.
MY APOLOGIES FOR THE BROKEN VIDEO OF INSIDE JOB IN THE COMMENTARY. I DIDNT THINK I WAS COPY WRITE INFRINGING WITH AN ITALIAN VERSION ALREADY ON YOUTUBE. HOWEVER YOU CAN STILL WATCH IT AT THIS LINK. STILL A MUST SEE!
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