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Gold Tests Nov. Lows, Then Highs In One Day? Dec 2, 2014

Gold Along With Other Commodities Jump, USD Weakens

I have to admit, I did not see that coming. Well in all honesty I, along with all the other sound money believers out there, knew that it would happen. It actually has to happen, there is no choice as profligate governments and central banks try to make fiat currency work with the worst spending and printing policies. This has never worked and never will. Its true I didn’t expect it to happen this soon and this may just be a blip on the radar but it could also be the start of something much bigger. Yes they will try and contain the rise in gold while letting other commodities rise, like oil, but they will only be able to control it for so long, how long is the $64,000 question. I dont expect things to get super interesting really quick but wont be surprised if it does. Considering all the efforts to maintain the status quo so far. When they do lose control its going to be a blood bath. Potentially a literal blood bath.

EUR/USD Gains On German Mfg. PMI Contraction?

I suspect that the push up on the EUR/USD yesterday has more to do with a USD beat down than any Euro strength as they try to support commodities. Maybe they actually are seeing the USD for what it is as well and we wont get the USD strength I mentioned in yesterdays commentary. There really isnt a reason for any strength in the USD according to fact based fundamentals but if they are going to keep gold down then there is no other choice than the USD. Time will tell.

Now that we have a push back into the mess its best to keep an open mind on direction. This does qualify as a decent push but with the push down failing they have essentially gone back to the level of chop. Until I see something more clear on a plan I wont have a bias on direction for this pair. The best level to short from is up at the 1.2500 psych level close to yesterdays highs. The daily level at 1.2489 is valid but more risky. Otherwise the safest long will be from the lows at 1.2421. While the hourly 200 is valid along with the 1.2456 for the long as well, taking an entry in the middle of price action when direction isnt in our favor carries more risk. In order to consider the mid levels I will need to see the Asian range widen along with seeing the typical tricks they play on weak holders.

EUR/USD hourly chart 12-2-2014

GBP/USD Fails to Make Third Push

Its not very often that we see them fail to make the third push and it is a sign they have lost conviction in the short term plan. Again at this point the best course of action for us is to be open on direction and trade only the most significant levels. At this point the only level I will consider a short is 1.5759 at yesterdays highs. The levels for any potential long are at the hourly 200 and just above at the lows of the NY/London overlap of 1.5713. However if there is a clear set up there I will be treating it as an aggressive entry due to the added risk, otherwise I prefer the short due to the proximity to current price and added risk taking a long with no clear direction.

GBP/USD hourly chart 12-2-2014

 

EUR/JPY Goes Whipsaw After Japan Credit Downgrade

When Moodys downgraded Japan credit yesterday there was a jump on JPY weakness to begin with but the beat down on the USD was more important so as the USD/JPY fell it took the EUR/JPY with it. At this point it does negate a directional bias for the first push from the range but fundamental wise the JPY weakness should continue. This was more likely to be pushing out weak longs than a potential sustained move. However I wont be using that to form a bias and will be open on direction today. The best levels to short are 147.79 and 148.09. I will consider a long at 147.29 and 147.07 keeping in mind that the mid levels carry more risk.

EUR/JPY hourly chart 12-2-2014

Forex News Today

The calendar is almost bare today with only UK Construction PMI data during the London session today. Expectations are for a slight drop so I will be looking for a set up before the release. In order to get much movement it will need to miss by a few points and at this point I see probability for a disappointment higher.

The NY session starts with Janet Yellen speaking so if she does drop any hints they will be pushing the USD around. I expect more of the same “US rates will rise but only as improvements continue” babble. So in effect nothing to see but how the big boys see it is what will make them move.

Happy Trading

Chad

MY APOLOGIES FOR THE BROKEN VIDEO OF INSIDE JOB IN THE COMMENTARY. I DIDNT THINK I WAS COPY WRITE INFRINGING WITH AN ITALIAN VERSION ALREADY ON YOUTUBE. HOWEVER YOU CAN STILL WATCH IT AT THIS LINK. STILL A MUST SEE!

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