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Fx Commentary EUR/USD and GBP/USD February 23, 2012

Today I want to give everybody a break on the Greek ordeal other than to say Fitch came out and downgraded them yesterday. It seems they are most often late to the party. Oh well at least they still get to have some fun. LOL

You know that things dont look so rosy when the US main stream media starts having articles titled “Economy in recovery? Not So Fast”. Talk about consistently late to the party. These guys are always seemingly the last to get it. The fact is the main stream media in the US is controlled or owned by the big banksters and those guys dont want the truth to be out until its so blatantly obvious that you dont really need the news to tell you. You can see it in the street by then. What strikes me about this article in particular from CNN is they will only mention the obvious again. The fact that gas is at extreme levels (well duh) , manufacturing is not going to save us (well duh, we destroyed our manufacturing base decades ago), and lastly China isnt going to save us (well duh, China isnt going to be able to save its self when anything like real economic numbers come to the fore). We just got a taste of how US numbers can be manipulated with our farce of a jobs report this month. China has never been very honest about their economic numbers so why would they start now?

What really gets me about this CNN article was they fail to mention the real reasons why this in NO recovery. The fact is the gauges most of the media uses to show the recovery is a farce. “The Dow at 13000” Yes that nice to look at but they fail to mention the fact that this rally has happened on the lowest volume seen in over a decade which means it hasnt been driven by faith in the recovery but by the banks who have been flooded with a ton of cash, are pushing the market so it looks like a recovery. Im not even going to go in to the latest jobs report. Let me just say I dont believe it for a second.

Now having said all that, what does it mean for the USD? Well there are a few facts that need to be pointed out and they are the US does have the best chance of recovery and pulling out of the massive hole we have dug for our self. The reason is we are more free to innovate and create which will be key to building any recovery. The problem is we are not a free as we used to be but still better off in that respect than Europe or Asia. So the potential is there where in the rest of the world innovation is limited and will hamper recovery when Asia does slow down. Which is a story for another day. So what will most likely happen to the USD is the same thing that history has shown. It will get stronger but at a slower pace mainly because until an actual full blown recovery is underway the powers that be will try to keep it weak.

As for the news today there isn’t very much considering the Euro. We do have IFO business climate from Germany that is expected to rise again. if this number does disappoint then we may see the EUR/USD finally make the drop from the choppy chop we have seen over the past few days. There is also unemployment claims from the US and is expected to rise. If this rises much more than expected the Euro should drop. However if it is much better than this rally in equities will continue and most likely the Euro will rise but I have doubts it will break and hold the recent highs and I have even less faith in a break above the February 9th high of 1.3321. However stranger things have happened.

Looking at the charts of course we are in chop mode on the EUR/USD as we have 2 indecision candles on the daily now. It is quite possible that the Smart Money will try and make a stop run above the recent highs especially if the German news is good. However I suspect these supposedly indecision candles mean they are loading up on shorts and the pair has been in level 3 for almost 3 days now. I am only looking for shorts on this pair and should I catch the stop run will be holding for a longer term trade. Its possible it could test the 1.3285 level again but seeing the rejection there it may not. I will be watching the 15min for signs of them trapping traders and look to short then.

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How about some GBP/USD analysis?

Yesterday the GBP/USD had a nice move of 165 pips or so and still has more in it. I was in it short from Tuesday and you can see that in the recent trades section of the site here shortly. The move was sparked by the BOE minutes reports but the fact is the down move agreed with the SM trend and the cool thing is there is one more level to go. It was kind of a bummer because I planned to add to this short but the news kinda messed up my entry and it never gave it up. Oh well ya cant catch every pip can ya.


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