GBP/USD Breaking Major Daily Chart Lows – October 1st 2015 Forex Commentary
EUR/USD Follows The Pound Down
The EUR/USD is looking extremely heavy this morning along with the Pound. Today I will be looking for the second push to the downside. The push yesterday looks to be our first push to the downside. I will however leave one lower level in from which I would look to go long because yesterday’s push was a bit shy of an average size push as well as the fact that the one lower listed level is extremely significant.
From a daily chart perspective the EUR/USD is coming to a very critical point from which further downside is the likley outcome. If you look at a daily chart of the EUR/USD you will see an extremely accurate trendline that has been ridden to the upside since the lows in March. If we continue the same trajectory to the downside we will touch it around the 1.1040 area give or take 20-30 pips. We have already broken more vertical, shorter term trendline to the upside as we talked about in earlier forex commentaries. The key around this type of formation is not the break but rather the retest if the break does occur. The retest is really the deciding factor on whether or not the break continues or fails.
Major Support Broken On GBP/USD
Anyone who follows Day Trading Forex Live knows that a break of support or resistance is not as straight forward as often taught. Nothing attracts liquidity like previous turning points in the market. Therefore, to determine whether or not the Pound is going to hold below these lows we will need to see what today’s price action does. At this point I will look at today’s move as the first push to the downside and I will be looking for the second push down today.
One of the most MISUNDERSTOOD aspects of the DTFL trading strategy is the use of market cycle. So many times I get emails talking about how market cycle is not clear and they don’t understand how we take entries. WE DO NOT USE MARKET CYCLE TO TAKE ENTRIES. Market cycle is just a filter that gives us a bias when it is clear. Whether we have a clear cycle or we do not have a cycle our entries come from the same place….a stop run of a pre-selected manipulation point. When we have a valid cycle we ignore any setup that goes the opposite direction.
What happens when market cycle fails? Do we take a loss? More often than not when market cycle fails the price will simply blow through our pre-selected manipulation points and NOT provide an entry thus resulting in a no trade day. This however is not a guarantee and we very well could take a loss obviously. I hope that helps clear up some point from anyone who has yet to become a member of DTFL.
Forex News For October 1st 2015
UK PMI Manufacturing 4:30 AM Eastern: UK PMI has been a pretty solid economic indicator when you get a deviation approaching 1 +/- from the expected number. This month 51. 3 is the expected number. We have been seeing a very clear trend to the downside with the piece of data (as you can see in the chart), and any number below 50 would more than likely send the Pound tumbling.
US ISM Manufacturing PMI 10:00 AM Eastern: This news has had a pretty good history of both a sizeable spike as well as continued follow through in the direction of the news after the initial spike provided the deviation is around 1 +/- from the expected number. This month 50.8 is the expected number. Also, like UK PMI we have seen a pretty steady downturn. Look for any dip below 50 to have a larger than expected impact.
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