EUR/USD, GBP/USD and Gold Analysis May 14, 2014
The EUR/USD finally got the third long term push I expected thanks to the large disappointment in the ZEW Economic sentiment figures from Germany and Euro Zone. Today I will expect some sort of reversal to attempt to hold the range. It also hit a significant daily level at 1.3695 adding more probability for the reversal since they will need some conviction to push it down below the last two months range. I do think eventually that will happen but its doubtful it will be today. Having said that the momentum on the way down was pretty good so its possible.
My preferred trade will be the long from a stop run to the lows but if they show clear trapping just above I will be willing to take the extra risk to trade a pullback. If they don’t give me an entry I will wait for a clear set up for a short at 1.3745 or a stop run to 1.3774.
The GBP/USD is clearly running on the intraday pushes right now showing the reversal Monday and a clear first push down yesterday. Notice how the potential bottoming formation was negated at the end of the day also. If they push it above Mondays lows during Asia they will likely test the 1.6860 level before they start the push. Otherwise as long as it holds below 1.6839 and pushes back down I will consider a clear set up there during the London session. There is the slight chance this is a false first push as well so I will be open for the long with a stop run to yesterdays lows but only if I miss the short. I would feel much better about a potential long if the bottoming formation held but it didn’t. I also have a concern that if they hold the EU above its daily level then this may as well unless it gets some help from the EUR/GBP.
Gold went into a chop yesterday with no conviction for the second push so I will be more open for the short from yesterdays highs or the four hour 200 EMA. Since the hourly 200 isn’t getting much respect I wont be considering it for an entry. Otherwise I would prefer a stop run to the lows around 1290.40 for the long.
Forex News Today
The calendar starts off with a slew of CPI data from Euro Zone countries but I doubt they will have much impact unless a few drop below zero. The German figures being most important and they are still expected above 1% so the chance is low. Later in the London session there are UK Unemployment figures expecting another 30K to come off the unemployed list and a drop in their Unemployment rate. If these miss to the upside they will likely hold the GBP up until the Inflation Report comes out and BOE Carney has his speech. Of which has the best chance to surprise today. They will be looking to see if they talk a rise in rates but I have my doubts they will since inflation is below the target. They might mention the help to buy housing scheme. If they do talk of ending it and the big boys are thinking the way I am the GBP will weaken.
The US has PPI data during the NY session. As long as they don’t drop below zero the USD strength should hold. However if they do then deflation scares will be back and the USD may weaken. Again it will be a who has the highest potential for going deflationary as to which currency will be weaker due to incoming QE.
Tomorrow during the Asian session BOJ Gov. Kuroda has a speech so would be best to hold off trading Yen crosses until he is done.
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