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Is The EUR/USD Set To Continue The Rally? FX Daily Analysis 3/16/16

EUR/USD Ranges Before Rally?

The Euro carved out a solid range today which is always a good point for us. The main reason this is a good point is because it gives us a very clear starting point for the next potential push. Additionally, this gives us solid manipulation points from which to look for a stop run to occur. Both our first upper and first lower manipulation points are also solid levels for backside traders. That means these 2 points actually give us 4 different trade options based on the rules laid out in the DTFL online forex course. I especially like the lower level as it is the only lower point in the area and therefore will no doubt attract a great deal of liquidity for either a stop run long, or if it were to break below, a stop run short off the backside.

EUR/USD Chart - March 16th 2016

Pound Slips Lower Aggressively

It was interesting to see the Pound slip so aggressively to the downside which is in line with the previous movement prior to this short term rally. It important to remember that the rally on the GBP/USD was not because of Pound strength, but rather it was on the back of EUR/USD order flow as the stimulus bazooka was unleashed. Therefore once that rally in the Euro slowed the Pound no longer had the artificial stimulus and therefore the move down insured. The start for this first push down did not give us a clear push which is why we cannot trade it with a directional bias. With that being said I do feel like the continued push down is the higher probability, with a small reversal day as a secondary option. An upside rally is by far the lowest probability for today. At this point I do not have a lower level from which I would consider a stop run long. To the upside I have two upper manipulation points listed on the chart below, from which I would look for a stop run short.

GBP/USD Chart - March 16th 2016

Forex Market News For March 16th 2016

Average Hourly Earnings incl/bonus & Claimant Count Change 5:30 AM Eastern: Please keep in mind that until the rest of the world springs forward with the time change, any European data will be an hour later than normal as is the case tonight. We have been seeing an interesting change with tonight’s Earnings number over the last 2 months. Until the last 2 months the Earnings data has been getting much more attention but that has changed to Claimant Count Change. At this point I believe it all comes down to the size of the deviation. For this month, Claimant Count Change is expected at -9.1K and Average Hourly Earnings is expected at 2

US CPI m/m 8:30 AM Eastern: While CPI is a good piece of data for creating a 15+ pip spike, it is very inconsistent for long term direction after the release. For this month it will be important to watch both the headline as well as the Core number. For this month Core CPI is expected at .2% and CPI is expected at -.2%

US FOMC Meeting 2:00 PM Eastern: Obviously this is always a substantial market mover. As this is outside of trading hours I would simply be closing ahead of this news and waiting for the next day.


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