May 13, 2014 EUR/USD, GBP/USD Daily Analysis
Of course just when I say the EUR/USD is getting back to more normal movements it gives us a 25 pip days range yet again. I have to say that don’t surprise me especially since yesterday was Monday and there wasn’t any news to get them stirred up. I will still have the bias for the short today and if they cant make the push I will be open for either direction tomorrow.
Not much has changed regarding the significant levels other than they made a higher push with yesterdays high. If they want to run stops they will pop that before a run down today but if not they will hold the 1.3769 level like they did yesterday. Considering this effort to push it to yesterdays highs during the Asian session this morning they may run it up to 1.3790 before the turn if price leaves the Asian box closer to the highs. If it does show hourly conviction in the process I will be cautious taking the short since that will mean they will likely test higher and potentially go to the four hour 200 EMA before any pullback. If they do run it that high the probability of them making the push lower goes down substantially so if I do catch the short from there I will only be looking to see it test the lows and take profit there while I am at my desk. If I can get a lower entry and am sitting with my stop at break even when I am ready to call it a day I will put my take profit at 60 pips and hold it over night to give the NY session a chance to break the lows.
The GBP/USD did make the reversal off the bottoming formation I mentioned in yesterdays commentary. This shows that they were running the intraday pushes even though there wasn’t an entry for the long. Considering the push up does qualify as an intraday push to the upside I will have a slight bias for the next push up while still open for the short around the psych 1.6900 level. There was some chatter from my news sources that they have fully priced in a rate hike from the BOE in the first quarter of 2015 along with some calling for an end to the housing bubble scheme Osbourne created to get the economy moving. My thoughts are they will start with ending that and all probability of a rate hike will go to the wayside with it since that is what has been supporting the economy thus far. To be honest I hope Im wrong and the UK can show a glimmer of hope but all things considered that is the higher probability scenario.
The best level I see for the long is 1.6860 but they may stop at the Asian lows if they can widen the Asian range a bit more and/or play the breakout traders to the Asian highs first. Otherwise the best short is from 1.6900 mentioned above but if they do hold it down during the Asian session the hourly 200has potential as well. The further away price is from the EMA when price leaves the Asian box the more potential it has if they drive it upward at the beginning of the London session.
I have to admit in my exuberance doing my first gold analysis I totally missed that the candle making the run down to the lows was actually the opening hourly candle and not the last candle Friday. I didn’t notice it until late in the day so no time for a correction of my commentary. It was an innocent mistake that Im sure most wont hold against me but the big issue is the impact it would have had on my analysis. As most members know the large moves on low liquidity are most often fake outs and this proved to be exactly that. At that point I would have still had the bias for the short but more open for the long as well. Now considering hind sight is always 20/20, looking back at how they moved it yesterday they did make the conviction close above the 1289.15 level missing the test of the next at 1292.83 giving three sets of manipulation patterns at the backside of 1289.15 with a low risk entry for the long. I hope some of our more experienced members saw that and made some pips. Personally I did take the short at the hourly 200 and was promptly stopped out for a 20 pip loss. Lesson learned. 🙂
Today we have the clean first push up and I will be bias for the long to see the second. Right now its testing the best level to get the long from at 1294.41. Normally I would expect the push upward to get more orders to run stops below there but I am still getting used to the dynamics of gold so they may not do that. If they do how conviction below there during the London session they will likely test 1285.98 before a turn. There is a less significant level just above at 1287.89 but any entry there will need a clear set up. If by chance they do show conviction below 1285.98 they will most likely be running it down to test the lows. Lastly I will be open for the short from the 1301 level where the four hour 200 sits but they will need to show they wont let it pass to change my bias.
Forex News Today
The calendar is light again today but we do have German and Euro Zone ZEW Economic Sentiment during the London session. Expectations are for a drop in the German data while they expect a rise from the Euro Zone. As long as these are close they will likely offset each other regarding the move for the Euro. Otherwise a disappointment in the German data should have a higher impact as the potential for QE from the ECB gets better.
The US has Retail Sales data today expecting a slight drop in core figure while a larger drop in the main figures that includes automobiles. The US really needs these to be higher than expectations to gain any traction on the potential recovery. If they disappoint big then we will likely see some USD weakness.
Asian session traders need to watch out for the RBNZ Governor speech tomorrow along with Retail Sales data from New Zealand as well.
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