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FX EUR/USD, GBP/USD Daily Commentary November 28, 2012

We have the reversal started on the EUR/USD with a nice 93 pip intraday push and the hourly close below Mondays chop. Today I will be bias for the short looking for the second push. Depending on how the Asian session works through the price action, as long as the current Asian highs hold this will be first place I will look for the manipulation.

If for some reason we get a push above Mondays lows during Asia the next likely place will be the next peak on the hourly chart at 1.2968. I have my doubts it will get there because that peak was the test of the Asian box break out before the push below Mondays lows. What I would like to see in order to take the short at the Asian box high today would be a small stop run to the Asian lows today during the London session then a run to the highs to induce longs and push weak short positions out of the market. It may surprise many of you just how often this happens.

There is a small chance that this could be a false push down and there be a set up to go long. However if anybody takes that entry you need to watch the hourly close. If you see an hourly candle close below yesterdays lows then just try to take the smallest hit possible. Personally I will be waiting for a clear hourly stop run to yesterdays lows before I consider a long position.  

1 hour chart of the EUR/USD on Nov. 28, 2012

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The GBP/USD remained in its 3rd push chop yesterday and I am still bias for the reversal. Since the EUR/USD has made its first push it adds more probability the GBP will follow. I did manage to catch the short along with several members of the Skype group from 1.6050 and now have the stop at break even. As usual seeing the 1 hour close below the lows from Monday will solidify the intent to make the push to the downside and I will hold this for a day or two hoping to see a good 100+ pip trade to end the month.

As with the Euro there is the possibility for the long if it holds the third push chop lows of 1.5994 but I will be watching the hourly close here as well for a clearer view. If we do see that hourly close below Mondays lows then I will consider adding to this position on a pullback and clear trapping formation. 

1 hour chart of the GBP/USD on Nov. 28, 2012

This is my trade plan for the day on these pairs. If you havent already read the article we posted yesterday on the importance of having a trade plan that fits you. I recommend you read it here. This will get you started with some ideas that every trader should be doing. Especially if you are struggling.

Forex News Today

In short there are only a few worth mentioning. There is the German Preliminary CPI figures will trickle out all day and without a large surprise there wont be much reaction. Of which I have my doubts on a big miss. If anything I expect a miss to the downside. There is also M3 Money Supply for the Euro Zone. I also doubt this will surprise any. The ECB hasn’t even started doing any SMP purchases or done anything with OMT so there shouldn’t be much from that. 

Later the US has New Home Sales. With Core Durable Goods better than expected release this has potential. The core figures consist of things like household appliances and such things that last more than 5 years after purchase. Of course it will have to be big to signify any recovery in the housing market and I think thats a ways off for now.

Some Wednesday Humor 

As I was writing the update on the Euro in yesterdays commentary I held back a little since they were still having the press conference but later in the day I ran across an article that said pretty much the exact same thing I was thinking at the time. Of course these guys have better sources of information than I do. Sometimes it amazes me to see people with far better resources having the same idea I do. Enjoy this excerpt from Zero Hedge and here is the link to the full article.

It wouldn’t be Europe if the insolvent continent did not announce, to much pomp and circumstance, another final rescue for a broke country which was nothing but a short-termist can kicking exercise. It also wouldn’t be Europe if the leaders did not do much if any math when coming up with said “rescue”, and it certainly wouldn’t be Europe if the initial EURphoria following such an announcement was not promptly faded. Sure enough, all three have now occurred with the EURUSD soaring to over 1.3000 in the moments after last night’s soon to be obsolete announcement, only to see a gradual and consistent sell off over the next several hours, dropping to a week low of just under 1.2940 as details emerged that… there were not details. To wit, as Market News reported:


In other words, the use of funds for the third Greek bailout has been more than detailed. The only tiny outstanding issue – the source of funds.

 I just couldn’t help but laugh when I saw this. What the real kicker is when Spain asks for its bailout. Just where in the heck is that money going to come from when they have a hard enough time finding money for Greece?

Happy Trading


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