February 21, 2014 Daily EUR/USD, GBP/USD Analysis
The EUR/USD has made a first push down with yesterdays move off the highs but with it being Friday the chance of them making a second push down is not as good as if it were during the week. The chop at the lows yesterday also shows that there wasn’t much conviction or at the very least they may have been clearing the books for the week a little early. If that’s the case it would increase the probability for a push today. Either way the best way to look at this pair is with a small bias for the next push down while keeping an open mind for a long with a stop run to the lows.
The best level for the short is around 1.3728 where it has a tested break out level. The problem with that is the proximity to current price so I will want to see the Asian session widen to the downside before considering the short there or at least see them hit the breakout traders to both sides of the Asian box during London today. Otherwise there is a good chance for the long at 1.3689 where the hourly 200 EMA sits. That is where it has the most confluence but if they really want to run stops the will pop the daily lows just below so the set up will need to be clear.
The GBP/USD has made what I would call a very sloppy fourth push making lower lows but had no conviction below Wednesdays lows. Again with it being Friday the best way to treat it is open on direction. The price action suggests a bottoming formation at the lows which adds some probability for the reversal today of which would agree with the Friday flows going back up into the chop. However the same applies here as with the Euro in that they may have done some book clearing through the chop already. The best level for the short will be at the 1.6695 highs while a long would be at either 16654 or better where the hourly 200 has confluence around 1.6622.
Forex News Today
The only significant data release during the London session is the UK Retail Sales. With expectations of it going into negative territory I would think it has a better chance to surprise to the upside but considering the negative data we have been starting to see they are probably pretty close so we may not see much movement barring a big miss.
Later the US has Existing Home Sales and a couple of Fed member speeches. With housing data not so relevant to how the economy is doing I don’t expect much here either but if by chance there is a big surprise that will be wrong. Having said that I highly doubt it could create a sustained move. The Fed speeches could rouse the markets if they deviate from what was released in the Meeting Minutes but that is highly doubtful also. For the most part all have been towing the party line so I don’t expect that to change.
Have a great weekend
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