EUR/USD, GBP/USD January 31st 2014 Daily Analysis
Yesterday we saw a rather clear risk off situation regarding the EUR/USD and GBP/USD but not seeing the USD/JPY and equities sell off too shows one of two things. One, it really wasn’t a risk off situation but more of USD strength or we had the BOJ defending its weak Yen policy while all the big banks that get first dibs on the 75 billion a month Ben is printing having no where else to put that money but in stocks. The higher probability is the latter the way I see it.
Today I will be looking at the EU as a first push down with a small bias for the next push today but there are a couple reasons why I will be open for the long today also. The first is its not just Friday but the last day of the month also. Therefore there is a good chance that they pull price back to the upside and chop around as they close month end positions. The best level for the short is 1.3588 being at 44 pips from the lows and 33 from current price. If that cant hold the potential for a run up to 1.3628 goes up but if it runs that high I would prefer to see the long triggered, take profit and call it a day. The best place for the long is currently yesterdays lows. but with the close proximity to current price the best scenario would be to see the run up during Asia and a stop run to the lows. There is also a significant daily level at 1.3524 that I will be watching if they break yesterdays lows for a potential fake out to the lows before the potential push up.
The GBP/USD has the same push down as the Euro but has already shown the potential fake out to the daily level at 1.6472 then holding at the end of the US session yesterday. I will have a small bias for the short here too but as with the EU, open for the long. The best level to short is at 1.6515 but with the hourly 200 and the 6520 psych level just above the confluence is better. If I do see the manipulation at the lower level I will be more particular about getting a good entry. With the potential fake out already showing at the lows I will be less critical of changing my bias for the short. I will prefer to see the run up during Asia before running stops below Thursdays close but the manipulation can occur anywhere in the range between 1.6472 and the lows so getting come clean trapping is what I will want to see or they will most likely test the lows and potentially run stops if they do intend a run up today.
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Forex News Today
The significant news releases start off with Retail Sales from Germany. It shows as a medium impact but with expectations for a drop close to zero on the monthly data if it moves negative it could have an impact and further weaken the Euro since as Germany gets more impacted from the weak Euro Zone they will be more open for lower exchange rates and possibly some ECB brand of QE. Otherwise there really isn’t much but Michigan Consumer Sentiment later in the US session. I expect the monthly flows to be what drives price mostly today.
The Latest From Max Keiser
As promised here is yesterdays Max Keiser episode. You may need to watch this a couple times to get all the info on why they cant let rates rise which is exactly what the market needs to correct and get back on more solid footing. The simple explanation is almost every major bank along with several Central Banks will be shown as insolvent and need to be liquidated. Enjoy.
Have a great weekend
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