Greeks Vote No & EUR/USD Gaps Down Huge – July 6th 2015
Is the Greek ‘Stick Up’ Over??
An overwhelming majority of Greeks vote NO. Are we finally turning a page? A vote to finally quit kicking the figurative ‘can down the road’ has the status-quo a bit shaken. Obviously there is no such thing as an easy answer to solve the current problem. The market however, are not showing a great deal of fear. I would agree we are seeing some risk aversion in equity futures as they are slightly in the red. With that being said a quick look at gold and silver would have you thinking all problems have been solved. With markets showing both risk on and risk off sentiment, more time is needed to get a clear picture. No doubt this will be an interesting week ahead!
Euro Gaps Lower On Greek ‘No Vote’
This looks like a miniature repeat of last weeks price action in the Euro. Overall the currency market did open up showing a bit of risk aversion. Over the last 7 hours since market open things have changed significantly with the Yen crosses as well as the EUR/USD rallying back to close the weekend gap. More often than not the market likes to fill the gap so that is not a huge surprise. Overall I think continued pressure to the downside of the Euro is the likely direction. If the Euro pulls past Friday’s lows the next decent area to produce a valid setup would be from Friday’s high. For the contrarian day trader, last weeks low will provide the one area I would consider a long setup from. A break and hold below that level will send the Euro to 1.0900 with ease.
The Pound Tug-Of-War
Right now the Pound is definitely benefiting from the Euro weakness. That being said it is having to contend with a strong dollar. Overall I think the direction of the GBP/USD is much less about the Pound’s strength or weakness and more about the overall risk on or risk off sentiment of the market. If equities begin to tumble and the Yen crosses get slammed at the start of the week, then continued GBP/USD downside is the likely outcome. If however the Yen continues to weaken and equities hold their own then I think some Pound strength may begin to take hold.
The Pound also has a unique situation in the overall positioning of smart money. We have seen a major shift in the current long position being held by smart money. Not only that but the current short position being held shank dramatically as well. This data is from last week. Many of you who are new to Day Trading Forex Live might be wondering how the Pound was falling but smart money was increasing their net long position. This is the basic principal of liquidity. If you want to buy the Pound then what do you need….sellers. Therefore, if their desire is to buy then the current falling Pound presents a good opportunity to do so without spiking the price. I do however believe the Pound will continue to push a little bit lower, with a test of 1.5450 being likely. For those of you who are members be sure to watch the daily market review videos this week as I will break this down in more detail as the week progresses.
For today the 1.5565 area is the first location I would look for a continuation setup short. Between that level and Friday’s high I do not see anything that would get me into a short. Its always possible the market could form an intra-day level but that will be something we will see as the day progresses. The Pound has no current lower level that would get be to go long as of yet. That is a short term perspective, and that will need to change if we are going to capitalize on what I talked about in the previous paragraph.
Forex News For July 6th 2015
CAD Ivey PMI – This news was much better than expected last month and it did create a large spike down in the USD/CAD pair. That initial move was however quickly retraced and the price then went back through pre-release. If your in a CAD based pair be sure to protect positions ahead of this news as it is a big spiker with a deviation of 6 +/- from the expected number.
ISM Non Manufacturing PMI – This is really the only news that will be likely to effect the EUR/USD or the GBP/USD tomorrow. With a sizeable enough deviation this is capable of creating a spike of 15 pips or more. Its important to remember that with the wider ranges in the market, a lot of this US data is coming back to life and is something to be mindful of. For the last year this report has been above 56. I would expect the biggest reaction on a sizable break below 56. As long as 56 holds this should only create a quick blip before resuming the previous short term trend.