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Forex Commentary EUR/USD, GBP/USD November 14, 2012

The price action the  EUR/USD showed us yesterday tells me that we have a good possibility that the third push down is complete. I admit it was a sloppy 3 pushes down but when the market goes into a chop for 2 days it is a signal that there is no clear direction. These days are not wasted however and trading manipulation at high probability manipulation points is key.

Today I will be open for either direction. I do prefer a short since we did make a lower low and had the hourly close below Fridays low of  1.2688. However with a clear stop run to the lows I will be happy with a long position expecting the reversal. If we do not get the stop run down today I will be patiently waiting for the test of Mondays highs and some manipulation for the short. There is a chance that we will see the trap move at yesterdays highs of 1.2726 but if they really want to push it down I would expect then to try and take stops above 1.2737 before the push down. 

If we are going to see the full blown reversal here the hourly close above yesterdays highs will be a good sign. If that does happen then we have a first intraday push up and I will be bias for the long moving forward. At that point the manipulation points I will be looking at will be the 15 minute 200ema or the Asian box lows today. The lows from Monday at 1.2695 would also be a decent price considering the daily rejection. 

We did not get a trade during the live London room yesterday, but I did manage to catch the news manipulation trade after the rumor was released the Germany wanted to give Greece 44 billion Euros instead of the 31 they are due. I thought to myself “what fool would believe such crap” (had to be the algos). Then sure enough Germany sent a spokeswoman out to squash it all. I took the short from 1.2717 and ended up getting stopped at break even after going to bed. At that point I was still expecting the third push down so I just let it go when I got my stop to break even.

1 hour chart of EUR/USD on Nov. 14, 2012

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The GBP/USD is showing similar price action which does give more credibility to the reversal if the correlation holds. As I mentioned in the Nov 12 commentary there was a chance that the third push on this pair started Friday and it now has reached the level I discussed adding to the possibility for the reversal. Since the correlation between the EUR/USD and GBP/USD didn’t hold up very well during the US session I will be looking at the EUR/GBP for some extra confluence today.

A clean hourly stop run or trapping pattern to the lows of 1.5856 will be enough to get me long but I will want to see the EUR/GBP coming up on some resistance to help the probability for the success of the trade.

The 1 hour chart of the GBP/USD on Nov. 14, 2012

 Forex News Today

Scheduled releases start off in the UK with their Claimant Count Change and Unemployment Rate. The Claimant count has potential to surprise but I don’t expect much from it. However I will be looking for the set up in the hour before the release. It also seems as though Forex factory pulled a fast one on me yesterday saying the BOE inflation letter would come out. That or the BOE changed the release date. Anyway that will be released today and I will be looking for the clues to what will be happening with the asset purchase facility. If there is no mention of it there probably won’t be much reaction.

The Euro Zone has Industrial Production expected to drop (big surprise). If we do see a larger miss to the downside it will be Euro negative. There is also an Italian 10 year Bond Auction that will most likely steal the show. As long as it goes off well as I expect the Euro will rise.

Later the US has Core Retail Sales, Retail Sales and PPI all expected to drop slightly. With out a large deviation I don’t expect much from these either because later in the US session the Fed Minutes are released. What to look for is Bernanke or other members agreeing with the statements from Janet Yellen yesterday on extending the ZIRP into 2016. Usually she is a Bernanke mouth piece so this could be the next move the Fed makes to hold the markets up. However the speech Yellen put on yesterday did not have its usual risk on reaction. We also may be at the precipice where the Fed is seen for what they truly are….Manipulators. And they really cant stop anything even if they did give it one heck of a college try.

Happy Trading


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