EUR/USD, GBP/USD Analysis May 21, 2013
The price action on the EUR/USD yesterday showed us that the reversal scenario was what they had in mind after the three pushes down. At this point I am going to consider this the first push up and be slightly bias for the long today. Since we do have Bernanke testifying tomorrow there is a good chance price will just chop around today. The big boys are looking to see if he does any more hinting of tapering off the print fest and my guess is he will somewhat but not much more than the article Hilsenrath put out the other day. Most likely it will mirror the Fed statement of “we are ready to act” meaning they could do either. Print more or print less. The fact is the data seems to be getting better but the economy surly is not so this is why I expect more of the same rhetoric.
The levels I will be watching for a long are these lows being formed during the Asian session. With the Asian range already widening out nicely, if this stops here and we get a stop run to the Asian lows during the London session after a deeper pullback then I will watch for the manipulation and take the long. Otherwise the short is still a possibility but I will want to see an hourly conviction close below the Asian lows during London to convince me and will be willing to short around the middle of the Asian range after seeing them play the breakout traders. However I would prefer to see a stop run to the highs yesterday of 1.2900.
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The GBP/USD has shown us a false push to the downside and gone back into the chop from last week with a 100+ pip push up so I will be keeping my options open on this pair today. We already have a wide Asian range of just over 54 pips so I will be open for the short with clear manipulation in the middle of the range but want to see them play the breakout traders to the Asian lows first preferably seeing an hourly close below the range also. What I will want to see for a long position is a decent retrace of this range and a push down with a stop run below the 1.5220 level. However I will also be watching that hourly close also and if we get one below that level I will be looking to short from the manipulation against it.
Forex News Today
The calendar is light again today. There is German PPI figures which will most likely be a non event since inflation data has been subdued lately.
The UK also has CPI and PPI data and expectations are for a small drop. The only real potential I see here is for a substantial miss to the upside. I have my doubts we will see it but that could have some effect on the big boys thinking they may slow the asset purchases. My thoughts are it would take a drop below 2% to create thoughts of adding to them which is highly unlikely.
The US has more Fed members speaking today so watch for the tape bombs on that.
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