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Fx EUR/USD commentary January 17, 2012

Todays EUR/USD commentary is a bit late guys I apologize. However this does give me an opportunity to express a few things considering trading the Asian session. I have been getting many comments regarding trading Asia and now have a reason to discuss it since there has been a decent move for a change. First of all with issues in the EZ coming to a head and much of it being priced in there has been just about no market movement during the Asian session. Which begs the question of what the heck happened today? In two short words its “Chinese data”. As I look at this move and the correlation between the S&P and other risk currencies this move is definitely risk related. Meaning risk appetite is in the market today. Chinese GDP data was better than expected along with industrial production and retail sales. Lets just forget for a moment that Chinese data is for the most part unreliable. What else does the market have to go by LOL. I always tell students to be well aware of any pertinent news releases of the day and this is a good example.

So how would I trade this using what we know about how the Smart Money operates? looking at my 15min chart there is plenty of info that would have gotten me into this move and I do understand I have hind sight to my benefit. First off we have a fake intent bar before Tokyo even opens that we can see is also a stop run. Then the consistently stronger move to the upside. I would have liked it more to see a definite Jump Bar up which there wasnt but when it did reach the resistance level and sellers came into the market there was a nice faded move. Those of you who know how I trade also know I would have been uncomfortable with the stop on this trade but the info was there.

Now lets get to the bigger picture. Since Monday was MLK day in the US there is really nothing to mention. However S&P did downgrade the EFSF which means the fund will have a much harder time selling its bonds and will have to pay a steeper interest rate on them. I do find it curious the market has shrugged this off with the Asian move but like I said much of this has been priced in with all the rumors floating around the last few weeks.

I think London will kill this up move but there is a chance the thinking of “China and Asia can save the world economy” may be back for a short time and the market feel its a good time to squeeze the shorts again. I dont agree but I am not Mr. Market LOL.

The daily chart looks mixed at this time. If I exclude price action today I would be thinking the move down is still in play. If we do get rejection of this up move then a break of the support at the 1.2620 area should break this week. However if optimism does presist or the squeeze is on we could also see a test of the 1.2800 level. I am keeping an open mind at this point. I hope this helps guys.

Be careful out there


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