July 22, 2013 EUR/USD, GBP/USD Daily Analysis
Looking at the EUR/USD this morning at first glance I see we have a first push to the upside. However also having that occur over almost 2 days makes me doubt their intent and my thoughts are the probability this is a false push is substantial. The levels I have marked are from last Fridays commentary and are still valid.
What I will be looking for to take a short will be how they move price around during the Asian session and will want to see them keep it below Fridays highs for the rest of the session. What will be preferable would be to see it run to the lows of the current range and then make an attempt at the highs as they accumulate during the London session with either a stop run to the highs or some clear trapping patterns at Fridays highs. This is typical of what they do when the Asian range is wider since they have already trapped long positions at the highs during Asia. Looking at the daily chart the 1.3173 area is a significant high and there would need to be either some certain optimism or faith that Ben will not taper purchases or potentially add. Well we all know there is nothing to be all that optimistic about the Euro and Ben seems stuck between a rock and a hard place with his print fest of which I will discuss more of later.
There is still the potential for the long but I will only be looking for that at either the 1.3120 or 1.3100 levels if price stays below Fridays highs and I don’t manage to catch the short. Otherwise I will also consider the long if we get the hourly conviction above the Asian highs during London and a pullback with manipulation around 1.3150. Of course the daily highs may still hold but at least with a good entry I should be able to get my stop to break even on a long from there if they do intend to hold it below. Of course the hourly conviction above the highs around 1.3176 and the potential for the next move up to at least 1.3200 or 1.3250.
The GBP/USD can be looked at 2 ways in that we have the first push after a day of confusion last Thursday or more than likely a third push up and looking to see the reversal. This test of the 1.5286 daily level is significant and there is another daily level just above at 1.5303 that I will want to see the hourly conviction above during London to be convinced they are going to be pushing it up again. My issue is I like to see more than just one day of confusion before a push to consider it a first push in a direction which is why I see this as more probable for a reversal. Having said that I could be wrong of which it wouldn’t be the first or last time so the price action will tell me later on today. If we do get the conviction to the upside then I will be looking for the long around the 1.5280 or 1.5266 levels also keeping in mind they may test the Asian lows or 1.5240 levels first. The best potential I see for a short will be a stop run to the Asian highs or the same sort of scenario I expect with the Euro happens with a push and holding below Fridays highs, play the breakout traders and manipulation to the upside at either Fridays highs or the Asian highs.
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Forex News Today
In short the calendar is almost bare of any significant news today. There are a few short term French bond auctions that could go bad considering the recent downgrade but its the 10yr that’s most important so these may be a sign of thins to come but will most likely be a non event.
Later the US has Existing Home Sales which could be a chance for them to manipulate on a surprise but even though some say housing is recovering in the US its actually being forced into a bubble by the Fed in certain areas while other places in the US haven’t even started to recover. Which is why Ben is in a sticky situation. I only expect movement on a decent surprise.
To Taper or Not To Taper
I know I have mentioned in previous commentaries that good old helicopter Ben is into something he has no way out of and the possibility of tapering is only to get some more room to most likely increase purchases in the future. However as I was watching the weekend edition of Max Keiser I saw this interview with Wolf Richter discussing the Housing Trusts and how they are in a situation that should Ben keep up the print fest they will soon blow with the way they are exposed. Check it out and see what you think. I’m thinking at this point saying Ben is in between a rock and a hard space my be the understatements of all understatements. Enjoy. When you get done check out this fictional article of what would probably be the case should Ben stumble into a bar drunk and expose the truth rather than do the political thing and blow smoke up everyone hind end. At first I laughed but when you think about it, funny is not the word that comes to mind. (Warning: Explicit language)
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