EUR/USD, GBP/USD October 1, 2013 Daily Analysis
The EUR/USD held the range yesterday and with the US government shut down inevitable here shortly at this point I see the probability of the break to the upside. last time this happened there was the proverbial pissing match in congress and the only way they could get their ducks in a row was to put the automatic sequester in the spending bill. They had several months to work out a deal so the sequester didn’t take effect. Low and behold it went into action because they still couldn’t get a workable plan together. meanwhile Bernanke and friends print away while the government spends its way into oblivion.
What sticks out in my mind is the all feared sequester didn’t have the dire consequences they said it would which shows they can spend less. However I should also say that they probably found loopholes they could easily slip the money through. So I doubt they were really spending less. Anyway it is what it is and here we are dealing with a rerun of last time with the debt ceiling of which could easily be worse as the blame game has started already and they didn’t even seem to be working on it until a couple weeks ago.
Even though the EU did as expected yesterday the level it went off from wasn’t clean enough to warrant me taking the confirmation entry at the Asian lows. Plus one of the key rules of them taking stops didn’t happen. As I was talking to a member about the nice potential manipulation at the Asian lows I was happy to see but it didn’t warrant the entry unless we had the same test and trap again and it just ran off from there.
The safest trade today would be from the high or low of the range expecting it to stay here for awhile but like I said earlier I see the probability of the break upwards higher than a break down so a short from the high will need to be clear and have a nice stop run. I will also consider a long from the Asian lows since there has been steady support at Fridays close at the gap close. I would prefer the stop run to 1.3514 or a little lower but we may not get it if they don’t see any prospects of the US getting their poop in a group.
The GBP/USD made the break above 1.6167 with the daily close above opening up for the push to 1.6277 or even the recent overall highs of 1.6377. I will have the bias for the move up today and look for the pullback to yesterdays highs for the long position during the London session.
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Forex News Today
Todays calendar has Manufacturing PMI data from Italy, France, Germany and the Euro Zone but barring a big miss I have my doubts any of these will over shadow the tape bomb news the market is running on now. The same goes for the US ISM Manufacturing Index later in the day.
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