Forex Commentary EUR/USD, GBP/USD April 9, 2012
At this point guys I am in wait and see mode. With a disappointing NFP on Friday last week we seemingly had a level up but we need to be weary of reversals built on news. If there is a higher chance for the retrace and not push on its when the first level is created on news. The EUR/USD and GBP/USD seem to be holding for the moment. The Pound better then the Euro but in all reality when I consider the fundamental picture I am leaning more towards the down move today. Below is the 1hr chart of the EU and it has hit the lows from Friday already and finding some support as expected and if you look at the 15min has seen 3 levels of intraday drop so it could be done for the day considering the holiday. However if I see 3 levels up that span a shorter price range and the manipulation I will feel confident enough to short. If it does run down from here I will most likely have a no trade day.
The GBP/USD is a bit different of a story. One could argue that its seen 3 levels intraday down but they are not that clear as intraday levels can be sometimes. What concerns me about a drop from here is its sandwiched between the 200ema from the 4hr and 1hr charts. It may need some build up of orders to break that 4hr 200 to the downside. Have to wait and see if we get the same 3 levels up and trap move.
In the news
The news today is extremely light with the holiday in Europe but there is Sentix Investor Confidence which is expected to drop and i would agree. With stocks in Europe dropping I would think if there will be a surprise with this release it will be to the downside. Otherwise we did just have the Chinese CPI and PPI data releases with CPI up a bit higher than expectations and PPI being slightly lower. The only reason I mention this is not just for the Aussie traders out there but the offset of these numbers. Yes commodities have gone down but one would think that should be passed on to consumers and the CPI would not rise that much. The wonders of Chinese data LOL
We have another earnings season starting this week and to be honest I usually never pay attention to this but now corporate earnings are looked at as a possible sign of recovery (or not) for the US. The reason being that if corporations are doing well then they will do more hiring and create more jobs, get more people back to work etc. What gets me is even though last year earnings were relatively good the corporations that made good money by cutting personnel just pocketed the cash and we actually have the highest corporate cash reserve amounts than ever. The previous earning season was sort of dismal and I expect this to continue. So what do we look for? The main thing is the large companies like GE, Alcoa, UPS etc… need to be watched. The reason is if these large companies are losing money they may be cutting jobs soon also and the recovery will stumble. The way this will affect currencies is whippy moves around the release times and after. This will also give the Smart Money a good opportunity to manipulate using this news so its a good idea to be aware of days where companies such as these have their release date. Most importantly for NY session traders as most American companies release their earnings just before the opening bell and during the NY session. The best place to get prerelease data is from CNBC.com. They let you know who is releasing data on a weekly schedule.
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