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Forex Daily Analysis EUR/USD, GBP/USD October 25, 2012

Today looking at the EUR/USD it definitely made a good attempt at the third push. Running for 78 pips. At this point I am inclined to think we will be seeing the reversal today. However this triangle it went into after the push down does have me concerned that we might just stay in this chop for awhile. Having said that my bias will be slightly to the long position today but I will be open for the short. It will mostly depend on the price action we see during the Asian session. Once we get an hourly candle to close above or below the chop during the US session yesterday direction will be more clear. I will also be keeping in mind that these are not that much of significant levels other than they are where the US market held price. My preferred area for the long will be the lows of 1.2920 but with some clear manipulation at the US session lows at 1.2939 the trade will be higher risk so I will need a clean set up. 

If we see the manipulation to the upside into the 1.3000 level the possibility for the short is there with a clear stop run to the level. However with a small long bias for today, all I will need to see is the hourly close above 1.3000 and I will be closing any short position as close to break even as possible.

1 hour chart of EUR/USD from Oct. 25, 2012

The GBP/USD made the reversal I discussed in the Oct. 24 forex commentary. However there was not any clear signal for an entry. Today we will be looking for the next push to the upside  with a small bias also. Since there is not only the daily high from Monday holding it down there is also both the 1 hour and 4 hour 200EMA’s. This is going to be a hard level to break to put it lightly. Therefore even though we have the bias to the upside today if we have a stop run to yesterdays highs of  1.6045 there will be a lower risk shorting opportunity to be had. 

The first place I will be looking for a long position will be the lows of the US session around 1.6000 but with out a clear trapping formation it will probably go lower. Possibly as low as the 1.5950 level. If it does get that low I hope to be holding a short entry from the highs. 🙂

1 hour chart of GBP/USD from Oct. 25,2012

Forex News Today

News from the Euro Zone is light with only M3 Money Supply. This is only a medium impact event and usually has a muted market reaction. It also hardly ever surprises dramatically so I am rather sure it will be a non event.

The UK has its Preliminary GDP q/q expected to get back into positive territory after last quarters big surprise to the downside got revised upward. If we see this surprise down into negative figures again it will be GBP negative for sure as the market will do more pricing in of more asset purchases.

The US has Core Durable Goods Orders, Durable Goods Orders, Unemployment Claims and Pending Home Sales. Considering the New Home Sales figures released yesterday were better than expected we have a good chance that the Core Durable Goods Orders will do the same. I wont be holding my breath but there is a chance. Unemployment Claims are expected to drop from last weeks disappointment. As usual if we get a surprise in either direction we will most likely see some manipulation. However since these figures are widely questioned it may not be much without a large deviation.

One Flew Over The Cookoos Nest

Maybe I am showing more of my age here but if anybody else recalls this movie with Jack Nicholas I couldnt help but recall this when I saw the news  of “Greece to be given extra years on budget targets according to a draft MOU” 

What made me laugh was not 30 minutes before that release there was this from a German Government spokesman. “There is no basis for a Greek 2 year extension” and about an hour before that most likely the same German Government spokesman said. ” will not discuss any reprieve for Greece, Germany is waiting for the Troika report”

What made me chuckle and thing of the movie was the Greek Finance Minister blatantly lying like that. For those of you who are unaware of the movie I will explain a bit. 

Jack Nicholsons character lies and says he is mentally insane to get out of a jail term. The court buys it and send him to a mental institution where he proceeds to have his fun. Eventually in the end when they cant take any more of his crap they give him a lobotomy. 

What made me laugh is when things go south like most of know it will eventually. Which of these guys will be getting the lobotomy they deserve. I have a feeling the Greek Finance minister will be first in line. With Mario Draghi and Ben Bernanke right behind him. Of course there will be several others. That is if they are not hung, drawn and quartered in the town square first. 🙂 

Happy Trading


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