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EUR/USD, GBP/USD Daily Commentary January 11, 2013

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By the looks of the move on the EUR/USD when I woke up this morning one would think that all Europes problems have been solved in a day. I have to admit it was a pretty good day for them. Starting off with an awesome debt issuance from Spain. Selling more than they had anticipated and at a rather decent interest rate. Even if it emptied their social security fund and put it in the red. 🙂

Later of course was Super Mario with a unanimous vote to hold rates instead of cut as recommended by a couple past members of the ECB. Sure there were downside risks mentioned in the speech as usual but the market obviously shrugged those off and we have a 230+ pip move to stare at today. The world is saved and I can rest easy now right? Maybe, maybe not.

One thing I do see is US equities didn’t really share in the scope of the move to the upside signaling there was not much risk appetite driving it. If this was a more risk driven move I would expect that the 5yr high on the S&P would have been broke at least. The USD/JPY didn’t really start moving until late in the US session when the volume is at its lowest usually. So at the very least something looks fishy about this move. Time will tell.

So where are we with the charts? Thats the million dollar question. The way I will be treating this is a first push up. However with such a large move in just one day I expect there will be a decent retracement before it breaks the highs of 1.3290 which is only about 20 pips away at the moment. The levels I will be watching for manipulation to take a long from are the breakout from 1.3233 on the 2nd of January. This level does not have high significance and if it dont hold we will most likely see the drop to 1.3189. The issue is the move was fairly efficient as the market moved through this price range yesterday so finding good points of potential manipulation was a little more difficult. What I would be most happy seeing would be a stop run to the highs at 1.3290 for the short.

1 hour chart of the EUR/USD on Jan. 11, 2013

The GBP/USD will be my preferred pair to trade today. Frankly it has much cleaner price action than the Euro over the last several days and has better levels for the manipulation to occur at. We are already seeing it find resistance at a break out level at 1.6172 and has a nice daily high just below at 1.6127 where we have a good chance for manipulation for a long position. If that area doesnt hold, just below is another high that will come in rather close to where both the hourly and 4 hour 200EMSa are sitting Those are the levels I will be looking for a long from. I will consider the short but only with a clear stop run to the highs of 1.6178.

1 hour chart of the GBP/USD on Jan. 11, 2013

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Forex News Today

There aren’t many high impact news events today but we do have a few medium impact ones that could create some movement. Starting with an Italian 3yr bond auction. My thoughts are with the Spanish auction going so well yesterday this will also as everyone still has the feeling all is well in Europe.

The UK has Manufacturing and Industrial Production figures both expected to get into positive territory. If they can manage a print of higher than expected figures it will add to the “all is well in Europe” thoughts and be good for risk appetite at least for now. As long as its not a big surprise to the downside I expect it will still be USD negative. Later in the day is NIESR GDP figures expected to be just above 0 at 0.1% .

The US has its trade balance figures expected to be close to the same as the last release so I doubt this will be a market mover.

Have a great weekend all


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