FX EUR/USD, GBP/USD Commentary September 20, 2012
Just as we expected the markets are getting back to the new normal after the the summer doldrums showed up for the first time in years and then the roller coaster ride that was the first week of this month with all the Central planners having their say. Starting up the proverbial print fest to infinity. Now Japan has chimed in and oiled their presses so they can keep up with the Jonses. What gets me in the craw is that these efforts are seeing even less half life than I would ever expect. the rally in the Yen crosses barely lasted hours and all 3 finished the day lower than they started. You just cant make this stuff up.
The EUR/USD price action was almost exactly as I predicted in the Sept. 19 forex commentary along with the GBP/USD following suit with even clearer manipulation at Tuesdays highs. Personally I was celebrating our 5th anniversary with my wife and family. Making my wife a special dinner to celebrate so I missed the festivities that was the market. However I was extremely impressed with how many members caught these trades. When read through the skype group there were several who got a good entry and to top it off we also received several heart warming emails from others that were in these trades. I know of one that even caught the New York reversal but not sure what he gained on it. Great job guys.
Today we will be looking for more of the same expecting a third push down on the EUR/USD. With the price action during the US session having the pullback as the buy side bias came in I am almost expecting that we wont see much more to this pullback today without some sort of tape bomb to help push it up. So the first place I will look to see the manipulation will be the Asian highs or possibly the highs formed during the US session yesterday. It wouldnt surprise me at all if we do see it run straight off either. Depending on what happens here during the Asian session I will have a better clue later in the day. If we see Asia finish on its lows I will expect a pullback if we end on highs then the possibility for it running off with out much warning is higher.
What gets me thinking is the candle patterns we are seeing on the one hour chart at both peaks yesterday. These are the same trap patterns we look for on the 15 minute chart to trade from. When we see these on the hourly chart they mean even more than the 15 minute patterns because as with all indicators or patterns the larger the time frame the more weight they carry. We will see.
The GBP/USD was the more pretty entry as it gave the clear manipulation right at the days highs while the Euro made a dip before the trap was clear. It even waited around for more than an hour after the manipulation was clear giving plenty of opportunity for the entry. Then it moved off nicely tripping its ADR before holding and eventually making the small pullback.
Today we will be looking to see the second push to the downside potentially starting from the Asian highs. This recent hourly close above the highs during the US session is of concern so we may see the highs tested during the London/US overlap which is also the breakout area of the move down yesterday. A nice hourly stop run into this area would make for clear intentions of the short. Of course as with the Euro this will depend on the price action during the Asian session. Since we are in such close proximity of the level now we will ahve to let it play out and see what London brings.
Forex News Today
We have a busy day ahead for news releases today. Starting with the Flash Services and Manufacturing PMI data from France, Germany and the EZ as a whole. With most of the previous releases being revised downward there is a larger chance for a disappointment with any of these. the big one of course being German Manufacturing. A large surprise to the downside and the chance of thoughts that Germany is closer to capitulating may materialize and we should see the Euro weaken. However it could also have the opposite effect because if Germany does give in then it will be seen as positive. That one is a tossup. There is also a Spanish 10yr bond auction. I dont expect too much from this and has more potential to go off well like the last few they have had. However with the news of Spanish banks having more bad loans piling up on their books it does have a small chance of not going off well.
The UK has its Retail Sales figures along with CBI Industrial Order Expectations. Both expected to be in negative territory. A disappointment on these and there may be thoughts of more printing by the BOE and will be GBP negative.
The US has Unemployment Claims, Flash Manufacturing PMI and Philly Fed Manufacturing Index. Any deviation on these will most likely have a muted response as the Fed has already pulled its last rabbit out of its hat and risk on/off due to data and if/when they will print is off the table now. The way I see it is the only way we will be getting good market moving news from the US will be when we see some drastic improvements and tightening comes back in the picture. Of which I dont see happening anytime in the near future.
A Gold Side Note
A word to the wise. Those of you that have been taking the advice of the many advocates buying gold out there. Dont trust anybody. If you hold gold bars from any source respectable or not. Do yourself a favor and take a small drill bit and poke a hole in every bar you have. Personally I am holding mostly silver and not a whole lot of gold but this weekend will be dedicated to drilling every bar to make sure I havent been ripped off. When the fraud makes it to the streets of New York then its past time to cover your butt and do some physical checking yourself. Check out this excerpt from an article this week.
It is one thing for tungsten-filled gold bars to appear in the UK, or in Germany: after all out of sight, and across the Atlantic, certainly must mean out of mind, and out of the safe. However, when a 10 ounce 999.9 gold bar bearing the stamp of the reputable Swiss Produits Artistiques Métaux Précieux (PAMP, with owner MTP) and a serial number (serial #038892, likely rehypothecated in at least 10 gold ETFs across the world but that’s a different story), mysteriously emerges in the heart of the world’s jewerly district located on 47th street in Manhattan, things get real quick. Moments ago, Myfoxny reported that a 10-ounce gold bar costing nearly $18,000 turned out to be a counterfeit. The discovery was made by the dealer Ibrahim Fadl, who bought the PAMP bar in question from a merchant who has sold him real gold before. “But he heard counterfeit gold bars were going around, so he drilled into several of his gold bars worth $100,000 and saw gray tungsten — not gold. The bar was filled with tungsten, which weighs nearly the same as gold but costs just over a dollar an ounce.”
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