EUR/USD, GBP/USD Daily Analysis February 1, 2013
The EUR/USD has given me the next push as I expected. I never like it when they finish it during the next session but thats what we have today. It is also tapping the daily resistance at 1.3617. If it can break this today it has all the way to 1.3800 before it finds significant daily resistance again and a bad NFP today could easily drive it there. Having said that there is still the possibility for the reversal but with the negative unemployment figures yesterday in the US there is a decent chance for the NFP miss today also. Of course this will create rampant thoughts of Ben going more in with QE and the USD will tank as long as the miss is significant enough.
My gut tells me the EUR/USD is still going up today. There is the hourly close above yesterdays highs early in the Asian session already but keep in mind that on the Euro the conviction during Asia is less significant that during London or New York sessions. In other words this could be a fake out too. What I will be looking for today is price holding above this break out level of 1.3592-1.3586. If it holds during the Asian session I will look for the manipulation to the downside for the long at the Asian lows first. Otherwise I am open for the short with a clear 1 hour stop run to the daily high level of 1.3617 but to be honest I doubt we will see that.
Update: Now we do have a 1 hour stop run candle to the daily level I mentioned. If I see some manipulation into that candle during the London its good for a short from a small pullback. Legs would be best but a couple pins will do fine also.
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The GBP/USD did do the more likely scenario I pointed out in yesterdays commentary coming within a pip of the support level at 1.5771 and giving us a third push up. As I was talking to Daniel on Skype we were both looking at the nice 15 minute pin to the 15min 200 EMA. It was quite nice and then gave an inside pin bar afterwards giving more clues that the manipulation was going on. I told him if it can get back to the 200 it was worth the risk for me since from there it was only 5 pips from the days lows. Then the sucker takes of with out me coming within a pip or two of where I wanted to enter. Sometimes I think they are watching my Skype conversations.
Today I think this pair has a better has a better chance for the reversal than the Euro does. The GBP is the weaker currency between it and the Euro right now. Having said that considering the USD weakness and the correlation coming back over the last 3 days there is also the chance we get extended levels here. It will depend on the price action throughout the Asian session and beginning of London before I have a clear bias on direction. In order to build a long bias I want to see that hourly close above yesterdays highs. Otherwise I will be happy to take the 1 hour stop run to that level of 1.5873 for the short also. If we do see the close above the highs then the Asian lows becomes a level to look for the manipulation or possibly the breakout level that has already been tested and rejected at 1.5841.
Forex News Today
News releases from the Euro Zone consist of the Manufacturing PMI figures from Italy, France, Germany and the Euro Zone as a whole. All are expected to be a reprint of that’s months figures with the exception of the EZ PMI expected to drop slightly. I doubt there will be much to see with these being NFP Friday baring a large miss. Later in the day there is the Euro Zone CPI figures expected to remain flat at 2.2% and I doubt this will surprise. No news here.
The UK has its Manufacturing PMI data also. Expected to drop slightly but still remain above the 50 level. A surprise below 50 would be the only thing that I think would have much effect on the market today.
Of course its NFP day for the US. With the unemployment data miss yesterday this has a chance to disappoint the way I see it but the bar is set pretty low at 160K jobs created. As usual a miss to the downside will send the USD in a tail spin. I have my doubts the Unemployment Rate will miss but if it does sneak up a notch the same USD weakness will come in so watch for that. Later there is the ISM Manufacturing Index expected to drop slightly. Again a surprise drop below 50 will be USD negative and to be honest a surprise to the upside don’t seem to be plausible
Have a great weekend
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