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October 18th 2013 EUR/USD, GBP/USD Analysis

This is what we get for the US government pulling their heads out for a breath of fresh air. The USD gets slammed while equities rise along with gold. Yes I have to admit I expected some USD weakness but seeing potentially 3 pushes over little over a day is a little extensive. I was very tempted to take the short during the start of the US session last night but although the set up looked good candle pattern wise there was absolutely no conviction in any selling so I stayed out expecting the EU to chop through New York. This morning I get up to the next 60 pip run up. I almost considered holding Euros instead of USD until reality set in after about 10 seconds. I thought to myself that if there is a currency that has the higher chance of going the way of the Do-Do bird it will be the Euro long before the USD. Not that the USD is less deserving. 🙂

Today I expect more of the week end flows to run these pairs and we should see some of this move pullback as the big boys take profits. If there is enough conviction they will make the push to the overall daily highs of the year at 1.3708 but with a 200+ pip move from the lows it will take more conviction than I expect they will have today. If they do have the desire today the best level to see the pullback to is 1.3617 where the US market held it up and wouldn’t let it pull back yesterday. Its also possible they only let it drop to 1.3636 but will need to be very clear to go long from there. Otherwise a stop run to the highs will be good for a short but I will want a really good entry and if they do show conviction above the highs I will close for a small hit and look to take the long.

EU 1hr chart Oct.18, 2013

The GBP/USD is in the same situation with an even larger overall move almost 300 pips so it fits the three in one scenario even better for a pullback today for the end of the week. If it can break down here during Asia then I will look for the short either at the mid Asia range if they play the breakout traders to the lows or wait and see if they get them at the highs also. The same goes here for the stop run to the overall highs but be watching the conviction if its there. Otherwise if I miss the pullback south then I will be willing to take a long with the right set up during new York at either 1.6095 but will prefer the proven support at 1.6058.

GU 1hr chart

 Forex News Today

The calendar is pretty much dead today with only some more Fed speak late in the day. Do they ever get tried of blowing smoke up the markets hind end? I guess not when they get paid so well to do it.

Can China Walk The Walk

I seriously doubt it. This Max Keiser episode talks about the Chinese saying the world needs de-Americanized the other day. Well I guess since we have learned that the US has been doing to its people the same thing the Chinese have been doing to theirs then I have to agree but is it really Americanized? Or is it more of a country ruled by the elites with all the money and power that needs to be changed or undone. If that’s the case which is more likely the truth then China, Russia, UK and most all of the European countries fit in that shoe the way I see it.

On top of that as Max says the American consumerism is what let the Chinese gain so much economic power over the last 20-30 years so without having somebody to make cheap goods for they are just as if not more so screwed as the US when the USD has its reserve status removed. Its not a matter of if but when that is the question. So what are the Chinese doing to foster that? Buying gold and as you will see in an upcoming post of yesterdays Max Keiser video they have been buying all they can get.

Something that Max does not address is from what I can see and you can search it yourself is the Chinese are the largest manufacture of gold plated tungsten bars in the world (along with any other counterfeit item you could think of) that even if they did all of a sudden announce that they would be backing the Yuan with gold. Would the world actually believe them and start using their currency as the worlds reserve? I find that hard to believe but I have also seen governments do stupider things. Enjoy the video. Check these links too.

Have a great weekend


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1 Comment

  1. graham
    graham October 18, 16:40

    thanks chad

    Reply to this comment

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