EUR/USD, GBP/USD Daily Analysis October 16th 2013
The EUR/USD made the reversal yesterday proving that the clearer 3 pushes to the upside and reversal was their intentions. Even though now we have a first push down I still find it hard to believe they will push below these lows but I will be sticking with my rules and have the bias for the short. The best level I see for it is at 1.3536 where we have seen several reactions over the last few days along with the most recent at the end of the day yesterday. On top of that they would have made a 30 pip push from the Asian lows this morning increasing the odds of them turning. There is the Monday low and hourly 200 just above so if the set up is questionable I will wait and see if they will push there watching the volume to show me whether they are truly interested or not. I will consider the long from the 1.3485 area but will need to see enough to convince me they just wont let it pass. Otherwise I will be holding if I am short to see if they are willing to break it down.
The GBP/USD did not make the third push yesterday going back into the chop. As I mentioned in yesterdays commentary the pushes were suspect due to the large pullbacks and low conviction on the breaks. I also was talking about this in the live London session that if the correlation between the EU and GU holds then one will fail like we saw happen. The dilemma we have today is both have not broken out so the best way to treat the GU is open on direction looking to short from the highs or take the long from the lows. Whats nice is price is sandwiched between the 1hr and 4hr 200 emas so the probability is good from both ends on this pair. I will say I prefer the short as it agrees with the potential break down on the EU but if they read this commentary they will surely not do that for me 😉
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Forex News Today
The calendar is light with only UK Unemployment figures and Euro Zone CPI data during the London session. I have my doubts either of these will be that eventful with it being the last 24 hours the US has before D-Day. Of course if the unemployment misses big it will cause a little stir in the GU but the chance of it being cause to make a break from this range is low.
The US has more Fed speak and a couple of short term auctions but those should be low impact also. Since we have had the recent speeches deny any possibility of the US default they are more or less admitting that Marc Faber was correct and the Fed will support the government. No worries folks. Just don’t look behind the curtain and all is well. Yea right.
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