EUR/USD, GBP/USD Daily Analysis May 5th 2014
So the Non Farm Payrolls in the US was much better than expected adding 70K more jobs than expected and the Unemployment rate dropped a full three tenths of a percent. Woo hoo right? Well it seems the euphoria was short lived as the move was fully retraced within a couple hours only to close the day just about where it started. Sometimes I actually think they read this commentary. That’s a joke of course because there are plenty of other sources that shows them exactly what I talk about. After all I am getting my limited information and coming to the same conclusion while they have small armies working for them gathering data I will never have the time to look for myself.
The bottom line is they know the US so called recovery is a farce which is also why they have no clear direction on the EUR/USD at this time. The fact is the mud is so thick in both the US and the Euro Zone that there is no way to tell who is the clear dirty shirt. They cant even see the shirt anymore. As I said in last weeks commentaries this will likely be the case for the foreseeable future until something breaks. I say breaks not looking to see a break of a level but a break down of the system. There is almost no chance at all that they can fix what they have done without a total melt down. However I do believe in miracles so one can hope.
We did get a gap to the upside this morning on the EUR/USD that filled within the first hour helping out the gap traders a bit to begin the week. At this time I will not have a bias on direction but all things considered the potential for the break to the upside seems higher than a break down. However the potential for staying in this range is probably higher the way things have been lately. We wont really know that they intend to keep the push going higher on this pair until we get a daily close above 1.3905. If we do get that it will most likely test the yearly highs above around 1.3966. A daily close above there opens the door to 1.4100.
The best level to short will be the 1.3888 highs last week but the 1.3878 level is still valid but too close to current price to take seriously. The best level I see for the long is at 1.3853 while the 1.3862 is valid but not all that great of a level. They could run it as low as the hourly 200 but it hasn’t been getting a whole lot of respect lately like the four hour on Friday so if they do push it that far down I hope to be short already and looking to exit at the ADR or Friday low.
The GBP/USD is in pretty much the same position. I would say we have an intraday push down but the rejection to the upside while holding above the 1.6856 daily high says more about the push down being more of a false run to push out weak holders. I will be open on direction here today also but do prefer a long. The best level for that would be from the 1.6856 but they may push it as far as 1.6845 so the set up will need to be clear. Otherwise I will be open for the short at Fridays highs of 1.6893 but the same will be true for an entry since Wednesdays high is valid along with the potential of pushing to the Thursday highs at 1.6918. If they do run it up that high I hope to be long and waiting for the break to the upside.
Forex News today
The calendar is pretty much dead during the London session today so we might not see much movement during that time. Otherwise there is the ISM Non Manufacturing data from the US later that has potential to get them pushing. Expectations are for an increase so as long as its that or better they will probably hold the Euro from breaking higher while a decent sized downward miss will give it a good chance of breaking higher. The GBP/USD has more potential to break higher on bad ISM figures as well.
Asian session traders tomorrow need to keep an eye on the Australian Rate decision. As long its as expected the AUD will most likely not move much but they are known for surprising the markets.
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