EUR/USD, GBP/USD Daily Analysis February 5th 2014
The price action on the EUR/USD yesterday shows me they really aren’t so sure they want to make a reversal but also didn’t show any conviction to the downside either. The best way to treat this pair today is being open on direction and look to trade the daily levels with clear manipulation. What looks to be the better probability is the long from 1.3492 but with the daily level at 1.3479 just behind it I will want to see a clear set up and get a good entry just in case they want to run stops to the lows first. The 1.3500 psych level also has a decent chance to provide the long set up however seeing some conviction to the upside will improve probability for a trade from there.
Otherwise the best level to short is yesterdays highs around 1.3534. If they want stops they will push it higher so I will be watching out for that along with any conviction to the upside. If we do get a run down and conviction below 1.3492 I will still be open for the long from the lows. However a good one hour close below 1.3479 and I will have the bias for the sort. More than likely during the US session later in the day.
The GBP/USD has a potential first intraday push to the upside moving almost a 90 pip run to yesterdays highs. Considering the probable fake out below Mondays lows and intraday push I will have a small bias for the push up today. The best level to see them start the push from is the Mondays lows at 1.6289 however if it does get conviction above yesterdays highs the Asian lows become a good level to take the long from today. As of now we haven’t seen much movement at all and they may wait for the ADP Nonfarm figures from the US later in the day. I will be open for the short with the stop run to yesterdays highs but I will need to see something that gives me a reason to change my long bias. I should also mention the 1.6366 level has potential for the short but the 1.6344 has higher significance so will want to see that hold in order to consider a short.
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The economic calendar starts off with Services PMI figures from Spain, Italy France Germany and the Euro Zone as a whole with expectations pretty much flat except Spain at a small improvement. The best case for any good chance of manipulation off these will be with a large deviation which I don’t expect. The bigger release will the same PMI data from the UK. Expectations are for an improvement but with the Manufacturing data surprise we may see the same here. What this will tell us on a strong rise is that UK people are getting back to spending on services showing that there really is some improvement in the UK economy due to the pumping of the current housing bubble and of course will be GBP positive. Most likely creating a move in the EUR/GBP stronger than the GU especially is the Euro Zone numbers are as expected or worse.
The US has ADP Nonfarm expected at 180K. With the bar set so low there is the small chance for a surprise to the upside but considering all the news I have been seeing on business planning to cut jobs and close stores the probability is extremely low. Almost 2 hours later is US ISM Non Manufacturing PMI expecting an improvement but if ADP misses this will need a big surprise to have much impact.
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