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Forex Commentary EUR/USD, GBP/USD November 1, 2012

We have seen our second push on the EUR/USD we expected as the higher probability. However the trap move during the stop run at the Asia lows wasnt all that clear and never gave a pullback for an entry so I didnt get a trade yesterday. This second push is shy of the 90+ pips we usually expect but when I look at the ADR, its at 83 pips so that is well within range to count as a push. I have to admit I dont like the rejection it got from the highs as the daily candle closed as an evening star or what ever you want to call it:)

My bias will be for the third push up today. We are already seeing potential trapping to start off the Asian session so as long as we see more of the same at that level later in the day its a good sign of confirmation and we will most likely see a stop run to that level like we did yesterday. Having said that the smart money hardly ever does anything the same two days in a row. Considering that my thoughts are we could see the stop run to the daily lows yesterday of  1.2945. The last scenario I think is possible is if we see a decent run up during the Asian session then it may not even test the Asian lows. If that does happen it will make a good entry more dificult.The one hour candlestick chart from Nov. 1, 2012

The GBP/USD has also shown the second push to the upside after what now seems to be the false push down Monday. I have to point out its also short of the 90 pips we expect but the ADR here is also tightened up so we have to assume the second push is valid. Having said that we close to a significant top so we may get a deeper pullback as they load up for the break.

The levels I will be looking at the most will be the support that was formed during the US session yesterday at 1.6093 or the psych level of 1.6100 just above. If those do break without a clear trapping candle formation then the chance that it will test the breakout level at Tuesdays highs at 1.6084 are good.

The 1 hour candlestick chart of GBP/USD on Nov.1, 2012

Forex News Today

Scheduled releases are slow during the London session today but get busier for the US session. The French and Italian banks are closed for a holiday today so the chance of a slow London session is there but not all that probable.

As a matter of fact there are only 2 significant releases from the UK during the London session. They are Nationwide HPI and Manufacturing PMI. The housing data I expect will be a non mover but the PMI figures are one of the high impact events we often see a set up occur during the hour before the release and then give us a nice follow through after.

The US session starts off with ADP Non Farm Payroll expected to show less jobs created. I expect this to be overlooked somewhat because the big NFP data release tomorrow. If there is a big deviation from whats expected then we will see some movement but anything close will most likely get ignored. Next is the weekly Unemployment Claims expected to rise a couple thousand. If this surprises to the the upside we will most likely see USD weakness.

About 90 minutes later the CB Consumer Confidence and ISM Manufacturing PMI figures are released at the same time. Both are equally important  and expectations are for s slight increase in confidence and a slight decrease in the PMI data but still above the 50 expansion level. What will most likely drive the market is a major disappointment from the PMI and a drop below 50. That will signal the Purchasing Managers are now pessimistic and will be USD negative. All supporting our EUR/USD long bias today so we should do well if we are provided a good entry.

More Rick Santelli

I know you all probably know how much I admire Rick for telling it like it is but this has got to be one of his better rants as he discusses Jon Corzine and how his “connections” in government and elsewhere have provided him a free ride while there is still  1.6 Billion USD worth of customer funds unaccounted for.

What really gets me is there was a time in my younger years when I was behind on my taxes. It amounted to around $3000 and the government was on my butt like stink on s#!t. They even garnished my paycheck to make sure they got their money. Now to see that they let this guy get away with something as large as 1.6 billion and not see him lose everything he has paying restitution is just pathetic. What a great government we have.

At this point I am much happier dealing with the trade offs in lifestyle living in the Philippines. I assume there will be many more like me in the future as well as Americans get fed up with the crap and pack their families up and move abroad. Anyway here is the video. Enjoy

Happy Trading


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