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Forex Market Daily EUR/USD, GBP/USD, EUR/JPY Commentary May 21, 2012

After the fluke pop in the EUR/USD during thee last hours of the US session Friday closed out my EUR/JPY short at break even. The market did not gap down as much as some might have expected on the G8 meeting. At this point we have a 1st push to the upside and I do expect this to continue. Yes the 1st level pushes do have a higher probability of failure but at this point I expect some of the short squeeze to come back and some profit taking at least after the large multiple push down over the last couple weeks. I am still keeping an open mind as the fundamentals are still the same but it wont take much optimism to drive this market up either. Today I will be looking most for the manipulation down during London for the long entry but if for some reason I miss the long and we get the push to the hourly 200ema and I see the trap move I will be ready for the short at that time.

The GBP/USD is in a little different situation with what I would call a first push up intraday and has gone into consolidation and looking to break to the upside for the 2nd push. Right now it is fighting the 200ema on the 15 minute chart but looks like it has the momentum to break it. Any long position I would take on this pair would have to be at a much better price to mitigate my risk but my bias here to to the upside today also.

The EUR/JPY looks quite interesting today for a long position also. With a nice head and shoulder bottoming pattern at the lows and the USD/JPY finding support at the 79 level it would make most sense that this pair tracks the Euro and goes to the upside today also. It may be difficult to get a low risk entry but this is where I will be focused mostly today along with the EUR/USD. The low risk entry I will be looking for will be at Fridays high along with some confluence of the Smart Money footprints.

Forex News Today

There is absolutely no high impact news releases scheduled for today so I will simply have my ears open for any press releases to try and time my trades with the manipulation that occurs should we get any. With the way things have been as of late we should have plenty.

A Lackluster G8

The G8 Meetings turned out to be a dud. As I read through the statements this morning and over the weekend there was just about nothing that gives me any reason to change my thoughts fundamental wise for the crisis. There was however one little phrase that caught my eye and it was a change of tone slightly on the austerity Europe is inflicting on its self and had a slightly louder ring of growth to it. Thanks to the new French president Mr. Hollande. However the tone on Greece was the same. I was sort of expecting more rigorous tone for growth and support which would lead me to believe there will be a coordinated effort coming sooner rather than later but at this point the way I see it is there will have to be a large bank on the verger of bankruptcy before that happens and considering the political fallout for Obama if the US goes into another round of QE on its own. At this point we will just have to wait and see what the market thinks and the way it looks during Asia this morning there is some optimism coming back for the time being. Of which does agree with how the Smart Money is setting up today.

More on Europe 

Looking through my news sources this morning I came across this podcats from Chris Martensen in which he interviews Alasdair Macleod and Alasdair has some very good points why it will be very bad for Greece to leave the Euro. These are most likely the main reasons why they didnt just pack up and leave long ago like I would have thought. Also these are the reasons that in my opinion if there was a country that could leave the Euro and it would benefit the Euro Zone the most it would be Germany. I know I explained this in detail in one of the live room sessions last week but it seems like this subject has lost its way from the main stream media and is not talked about any more.

If Germany were to be the one to leave the Euro the currency could weaken to a degree that there actually could be a chance for growth to emerge from the weaker countries. Of course all these profligate countries still need to remove head from a** in order to get their ducks in a row but at least they have a chance. With the way Germany has maintained the strength of the Euro and forced the austerity on the rest of the EZ there is about a snowballs chance in hell that these countries can get it together. True there is no way out with out pain but this would be a less painful transition the way I see it. The risk is that these countries will most likely keep on muddling through with head firmly stuck you know where and they will be in the same position down the road. However at that point at least Germany would be much better prepared and out of the Euro loop. I wish I could say that I have more hope for Europe but the fact is I dont. As much as I want to believe the powers that be will do the right thing I find myself proven wrong more than I care to even count these days. Its a crazy world we live in folks. Enjoy the podcast.

Happy Trading


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