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EUR/USD Cycle Broken – Forex Daily Commentary 3/3/2016

Downward Cycle Broken For EUR/USD

The EUR/USD gave us two pushes to the downside and never completed the cycle with a third push to the downside. As I mentioned in yesterday’s daily FX analysis, if we get two days of sideways price action then we go back to trading the manipulation points to both sides of the price. Our upper levels today are rather limited for the Euro which gives us few points to consider a stop run short from. I don’t think this is a bad thing as the current move down could be slowing which means the short option becomes much safer only after the current Average Daily Range is hit. Our only upper manipulation point is beyond the ADR and therefore the market would be rather extended at that point which makes a stop run short much safer. As far as lower levels we don’t have many other choices outside of yesterday’s low. That is officially the level where the long side of the market goes into the red which means heavy short term liquidity. I would also consider a backside short from that point if we do in fact break lower.

EUR/USD Chart - March 3rd 2016

Pound Gathers Short Term Momentum

The GBP/USD may very well have given a first push to the upside but I will be continuing the open directional bias. Essentially the push off the lows from a couple days back was not a clear starting point for the move. In the section of our online forex trading course that talks about the market cycle, I stress how important ‘context’ is. What I mean by context is, what can I look at on the left hand side of the chart to tell me about what will happen on the right hand side. In other words, a clear starting point for a cycle is essential. This latest push lacks a clear starting point which means bias stay open. As I try to stress over and over, market cycle is only 10% of our day trading strategy. Our trading strategy is however 90% the selection of manipulation points and then waiting for the stop run of those levels. That is what actually triggers our entries and we CANNOT have an entry without it. For today we have one upper level which would be more of a reversal point for any push up. With a slightly higher bias long we do have two lower listed points from which I would take any stop run setup long.

GBP/USD Chart - March 3rd 2016

Forex Market News For March 3rd 2016

UK Services PMI 4:30 AM Eastern: UK Services PMI has seen a pretty sizable reduction in the size of the spike over the last 3-4 months but it is still a news event I would not carry into. One of the things I mentioned in yesterday’s market analysis, Construction PMI was seeing a continued slide to the downside. Like Construction PMI (which did miss to the downside), Services PMI is also trending lower. We will see if another downside miss takes place. For this month, 55 is the expected release number.

US ISM Non-Manufacturing PMI 10:00 AM Eastern: ISM Non-Manufacturing has seen both a sizable spike as well as continued follow through in the direction of the release. 49.8 is the expected number this month.


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