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GBP/USD Rejects Lower Prices – Forex Market Analysis 12/1/15

EUR/USD Continues To ‘Hibernate’

Sorry for getting today’s market commentary out a little later than usual. Today’s analysis for the Euro is going to be quick and to the point. With price action that could put anyone to sleep there is not much to cover that we didn’t walk through in yesterday’s FX analysis. Overall the directional bias continues to remain open and we have one upper manipulation point from which I would consider a short and one lower level from which I would consider a stop run reversal day trade long.

EUR/USD Chart - December 1st 2015

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Pound Rejects Lower Prices

The Pound had a lot of interaction with our first lower and our first upper manipulation points from yesterday’s FX analysis. We surged through the lower level to start the day which invalidated any possible day trade long. As the day progressed we eventually had a stop run off the backside of the breakout point which presented an opportunity to take a short. This setup illustrates why a trade plan is critical to becoming a profitable trader. Based on our trade plan we do not enter a trade within an hour of any news capable of spiking the market more than 15 pips. As you noticed yesterday we had US data scheduled for at 9:45 and thus we could not take the short. The other factor which kept us from going short AFTER the news was released was the candle count. Based on the rules of the confirmation entry trade setup, we must have the entry within the 5th candle or the trade becomes invalid. This was not possible with the news and therefore resulted in a great no trade. A successful forex trading strategy controls risk first and foremost. While this may keep us out of some good trades, it is important to remember how many times these same rules protect us from a loss.

Today the directional bias continues to remain open. If this entire move up had occurred outside of the Asian session then I would have considered it a 1st push up based on our market cycle criteria. Half of this move occurred during the Asian session which is what makes it an invalid first push up and thus why the directional bias remains open. As with the Euro I only have one upper and one upper manipulation point from which I would consider a setup today. We do have a lot of room for a new level to form intra-day, but that has yet to be seen.

GBP/USD Chart - December 1st 2015

Forex News For December 1st 2015

UK Carney Speaks 4:00 AM Eastern: If you do not have access to live news of the speech or at least live headlines then I would not be trading during it. These are always very difficult to determine just how much the market is going to respond. Sometimes it takes seeing the markets volatility before you truly know. If you just see the market spiking back and forth 3-5 pips and spreads widening then you know the market is paying attention. That is the exact time I would be getting out of any Pound trades if I was in one.

UK Manufacturing PMI 4:30 AM Eastern: Easily capable of a 15+ pip spike but very often the market retraces the initial move after a few minutes have passed. This is the type of news that I like to see come out counter trend as it often provides a great retraces before continuation in the direction of the move prior to when the news was released. Last month we had a huge deviation up. Its no surprise that just when the UK needs something good the economic data starts “surprising” to the upside. Notice the downward trend in the chart below. It will be interesting to see if last month was a fluke or if there is truly some type of bounce in the data. This month 53.6 is the expected number.

UK PMI Chart - November 2015

US ISM Manufacturing PMI 10:00 AM Eastern: This month 50.5 is the expected number. Overall this news does not move the market very often but on a reasonable deviation it has produced a 15+ pip spike and therefore that is why I have it listed as economic data to watch out for. Like the UK Manufacturing data, US data has been slipping towards the negative market. Remember ’50’ is essentially the 0 line for these numbers and anything below 50 is therefore looked at as negative.

US Manufacturing PMI Chart - November 2015



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