EUR/USD, GBP/USD Daily Analysis July 23, 2013
The EUR/USD this morning looks to be a mess. We did get the push up but it was only 74 pips and now that I have that to look at the clearer way to look at it is 3 intraday pushes to the upside and topping formation at the highs suggesting we are in for a reversal. I never like seeing the pushes in such short moves but this is reminiscent of what happened last year when the Average Daily Range tightened up for several weeks. So lets just put it all together.
Long term we have 2 pushes up but that’s about it and the second push is lackluster at best. On the other hand we have three intraday pushes that are short (about 74 pips each), a run of just over 150 pips over a 2 and a half day time frame and a topping formation at 1.3200. At this point the probability for the reversal is higher the way I see it. Could it still go long today? Yes it surely could go into extended pushes and break above 1.3217 highs but in order to be convinced of that I will want to see the hourly close above. At that point if it does get to that level it will be a low risk short if we see some trapping of traders up there during the London session today.
I will still be keeping my mind open for the long but will want to see something clear to change the small short bias I have for today. Seeing something to the effect of a tight Asian range and seeing them play the break out traders to both sides will do with a good entry.
The GBP/USD has made the next push up coming within 10 pips of a fairly significant daily level at 1.5391. Considering my analysis from yesterday and the potential for this being an extended push rather than a clear second push up we could still see the reversal here today or it extend into a third push off Fridays lows. Therefore I will have a small bias for the next push up (of which would most likely drag the Euro with it somewhat) to test the next daily level at 1.5442 or even the more significant level higher around 1.5480 which is also where the daily 200 EMA is riding.
Having a different bias on each pair is a risky way to look at things and with the rarity of the EU and GU moving opposite directions I will be cautious trading today. One pair will probably lead the other in the break depending on how the EUR/GBP is moving and we may get some clues from the price action there.
The levels that present the best chance for the long are the 1.5340 and 1.5320 but it may run as low as the 1.5300 daily breakout level which would be nice if they can show me a reason to chance the small long bias and I can get a good entry on a short for a reversal providing they make the push. The only way I will be looking to use the Asian lows is if we see the hourly close above yesterdays highs and preferably the 1.5391 level. Any potential short will be from the highs with some convincing trapping patterns and a good entry making it lower risk waiting to see if they show any conviction to the upside.
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The scheduled releases today look rather busy but in all reality there is nothing that has much potential for them to be using to manipulate with. They will most likely be moving on the potential of Ben not tapering the way it looks but remains to be seen.
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