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Euro Strengthens Ahead Of ECB Jan. 20, 2015

Euro Gains Some Strength Ahead Of ECB Release Of QE

Although the move was not as extended as recent ones the Euro managed to gain some strength yesterday. With the ECB expected to announce a QE program of up to one trillion of bond purchases I would think that the Euro should weaken instead of gain some strength. That has most often been the case when a government dilutes its currency with the one exception of the ECB. This is the new normal we live in. As I have mentioned in previous commentaries the ECB has always done a sort of back door print allowing them to hide a sizable chunk. So the normal effect of a sudden drop in the value of the Euro with continuing weakness has always been an initial spike of weakness, then as they start to think how the ECB is “sterilizing” the purchases they for some reason think that somehow its will work this time and help the dire situation the European economy is in and the Euro gains strength rather than has continual losses as it should. Having said that, this time could be different and as usual all depends on Germany and how they work the program to satisfy German interests since we already know that the ECB is skirting a law forbidding them to buy sovereign debt of any European country. If for some reason Super Mario just ignores Germany and just goes full blown retard (unlikely but possible) then we will see the Euro weaken. However if history shows us any clues they will more likely be doing something to get the German backing and we will get the normal spike down taking stops followed by Euro strength. With that in mind they will most likely stay within Fridays range today waiting on the ECB Thursday.

EUR/USD Reversal For Intraday Push

Today I will be more open on direction even though we have a first intraday push up on the EUR/USD. I do find it a little suspicious that the test of Fridays highs yesterday didnt run any stops so they will likely do that today if they run a push down. Otherwise the reason they didnt get stops yesterday could also be they intend to use them to fuel a push up today since yesterday was slow during the NY session due to the American holiday. The levels I will be looking for a long are at 1.1585 and 1.1522. The upper level being more aggressive unless we see them push up to widen the Asian range after a test this morning. Otherwise I will be open for the short at yesterdays highs but prefer to see them run stops to Fridays highs adding probability to the short.

EUR/USD hourly chart 1-20-2015

GBP/USD Holding Tighter Range

The holding of a tighter range on the GBP/USD yesterday does show they aren’t sure which way to push this pair as of yet. The conviction and test lower during Asia this morning smells of fake out but we will have to see what they give us during the London session. As long as they hold the current Asian lows and push upward before the London open I will be looking for the set up long around 1.5081 or lower. Otherwise if they do hold price to the lows without a long set up and run to yesterdays lows I will consider the short at 1.5108 but there is a good chance to test higher due to the slow NY session yesterday.

GBP/USD hourly chart 1-20-2015

EUR/JPY Shows First push Up

This push up on the EUR/JPY seemingly has more to do with the Euro than the Yen so I will be cautious taking an entry this morning. The USD/JPY is not really helping with all the resistance above the level its potentially showing some conviction after this candle close further taking away some probability of a successful trade during the Asian session. Although yesterdays highs are valid for the short I will want to see the UJ hit some higher more significant level and agree before taking the EJ this morning. Otherwise if it does trade mostly on the Euro today I will wait for London and look to be getting long with a test of 136.15 or above yesterdays highs after some conviction to the upside.

EUR/JPY hourly chart 1-20-2015

 

Forex News Today

The calendar is quiet today other than German ZEW Economic sentiment expected to rise. The way I see it is there really isnt much reason for a rise other than anticipation of the ECB QE program so the potential for a disappointment is higher. Later in the day there is a Fed member speech but I have my doubts it will cause much movement baring a tape bomb.

Happy Trading

Chad

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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