Massive US Dollar Push – FX Market Forecast 2/1/16
EUR/USD Tanks On USD Strength
The Euro continues to remain in an incredibly tight range over the last 2 months. The bottom line is we trade what the market is giving us. As such until we breakout I will more than likely continue to trade the manipulation points to both sides of the price. That simply means I take any valid stop run from any of the pre-selected manipulation points, regardless of direction. One thing that is interesting is the US Dollar Index which looks to be close to a breaking point. For lack of a definition, we are currently seeing a upward triangle which could lead to a powerful push up. Its important to understand that this compression of price does not guarantee a continued push up, but it does give us a very good indication that a powerful move is likely to follow. For today I only have one upper and one lower manipulation point from which I will look for a valid stop run to occur from.
Pound Tanks 270 Pips
The GBP/USD took a massive dive on Friday as the US Dollar rallied heavily. Looking at the COT Data on the Pound, there is a massively short position in the Asset class which is the longest term perspective on market directional bias. This in combination with potential looming US Dollar strength could provide a massive continued sell off. Going back to Friday’s push, the move was double the ADR. Whenever we create a move outside the norm I continue to keep the directional bias open. As you can see in the chart below I do not have a valid upper manipulation point within the likely range. One of the things I talked about in the members daily market preview was the possibility of a newly created upper manipulation point. This is what we would need to see occur to get an opportunity to take a short position. We do however have 2 lower manipulation points from which I would consider a stop run long.
Forex News For February 1st 2016
UK Manufacturing PMI 4:30 AM Eastern: UK Manufacturing PMI is a big market mover. This is another news event that has very little consistency in regards to how often it will follow through in the direction of the news. This month 51.8 is the expected number.
US Core PCE 8:30 AM Eastern: We have a mass of news coming out at 8:30 AM Eastern. I will be avoiding the release but I don’t think any of these news events are major trend changes. PCE is expected at .1
ISM Manufacturing PMI 10:00 AM Eastern: While this news has not seen much reaction from the market lately it has created a 15+ pip spike in the last 6 months which is why I will avoid carrying a trade into the release. For this month 48.5 is the expected number.