EUR/USD, GBP/USD, Gold Analysis June 18, 2014
The move down on the EUR/USD back into the range was pretty much what I expected regarding the potential for anybody raising rates at this time. Considering all the hoopla I think its the ECBs turn to go full blown QE. German data has been to falling in line with the ZEW figures yesterday. So the Bundesbank is starting to get what it needs regarding Germany finally showing clear effects of the Euro Zone slow down. Remember we only heard Jens Weidmann mention potential ECB open bond buying when German data was starting to look bad. As long as that continues, which is likely, the ECB will be stepping up to the plate for their round of pumping fresh cash into the markets giving the Fed its opportunity to taper to the zero mark and most likely hold out as long as possible before they go full retard and throw another couple trillion at the market. Keep in mind all the central banks are in cahoots and even though the BOE went full print mode while the Fed did the ECB was holding back doing back door printing. Now since that didn’t work they will want the Fed to at least be close to finishing the taper before they jump in with both feet.
Again today I will expect this range to hold but considering the above statement they may start to price some of that in and make the break downward. Its not really that probable but has a good chance with the Fed on tap today. The best level I see for a short is up where the confluence of the hourly 200 is at 1.3566. The 1.3557 is valid but seems a bit to close to current price along with the Asian highs that coincide with late day confirmed resistance yesterday. In order to short from the lower levels I will need to see either conviction below yesterdays lows or price leave the Asian box at the lows and hit the breakout traders. I’m open for the long from a stop run to yesterdays lows but it does carry more risk being the middle of the range. They will need to show me the typical trapping and almost be screaming they wont let price break 1.3535. Otherwise If I do miss the short I will be open for the long at 1.3520 with a clean set up during the NY session.
Not much has changed considering the GBP/USD today, other than the violation of Mondays lows and depleting of any bias for the break to the upside on the hourly conviction Monday. At this time the best long entry will be at 1.6940 or just below at 1.6920. The possible shorts are preferably 1.7002 hitting stops above Mondays highs or just below at 16989 with a darn good entry since they could always hit stops above before a move down. I wont be convinced on direction until they show conviction above 1.7008 or below 1.6920. Once either side shows that, the potential for a larger move is very good.
Gold made a very similar move to the S&P 500 yesterday and if equities can still maintain the up move I expect Gold to give and make the next push down with the big boys attempting to test the recent lows. When these move together they are not moving on risk but rather the potential for the print fest continuing at a regular pace as the dilution of money that seems to always end up in equities also gets the gold bugs buying at what is considered bargain prices. At this point they may not try and do a smack down just yet so I will be open for the long today. There is enough to support either direction with the two pushes down adding favor to the short while the rejection at the lows and close flat on the day supporting a next push up. The kicker is if/when the big boys need lower prices to load up on their own gold they will give it a beating.
In short I will be open on direction to trade gold today depending on how they push it around during the Asian and London sessions. Gold has proven to move well around the NY open most of the time so will be looking to see where its at then. The best levels are the 1265.50-1262.34 range for a long and 1271.16- 1272.79 for the short but the proximity does concern me for the shorts so would want to see the dip down and test it later.
Forex News Today
The calendar today starts off with the MPC Meeting Minutes from the UK. This will be interesting to see if there were really any discussions of rates rising other than the Carney lip service last Friday. If not they will most likely see it as a ploy and the GBP will weaken and retrace a good portion if not all of Fridays move on the GU. If they did discuss it and any measures to take for rates to rise (which I highly doubt) it will give the big boys reason to break the yearly highs. Should be fun to watch. I hope Im in a position and my stop to break even for the potential fireworks 🙂
Later the Fed steps up with their rate decision and Press Conference. This should go as most expect with another taper move since the CPI data popped above the 2% on the yearly figures showing in normal conditions rates should potentially rise. However I am pretty sure they wont signal rates rising either but just more reason to taper. This should be good for the USD.
Asian session traders need to watch out for NZD GDP tomorrow morning but that’s about it.
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