Risk Aversion Confirmed, Stocks Drop Fifth Straight Day
Equities Have Worst Start To a Year EVER
To be honest I havent seen all the data that would show this to be the worst start to a year ever but it surely makes sense when I consider the closing at all time highs just before year end of 2014. Combined with probably the largest stock bubble ever pumped by governments and central banks in unison and it shouldnt be surprising to anybody. Its simple physics in the form of, for every action there is an equal and opposite reaction. Something to the same effect of housing prices believed to have no place but upwards in 2007-8 proving to be fallacy as well. This time its much bigger though so the ensuing reaction will be comparable to the first action. This cant end pretty.
However I do have a very funny video for you that I just had to post. I was literally brought to tears the three times I watched it. Enjoy
Now I know its not a good thing to enjoy the pain of others and I do feel for the ones duped into buying at the top, however there are surly those out there that caused this mess who deserve it. Lets hope they are the ones taking the biggest hit 😉
EUR/USD Holds Mondays Range
Yesterday In the live training room I was talking about the hefty daily levels the EUR/USD was approaching, having good potential to hold at least temporarily. Now we have a potential stop run to test down to just above the 1.1846 level still leaving the potential for a reversal open. If the risk aversion holds up they wont be doing much of a reversal so as long as they hold below the Asian highs then the 1.1887 is valid for a short during the London session. However I will still be open for a long at the 1.1846 if they run there first and set up for a long. Having said that I wont be holding any long position for more than twice my risk.
GBP/USD Runs Second Push Down
Considering the large move from January second being what we look for in a three push move, the last couple days of price action are clearer look at as two clean pushes down on the GBP/USD. Today I will be looking mainly for the short while I have to be aware of the potential false conviction during Asia testing down to the daily/monthly lows of 1.5115. This increases the chance that the test lower during Asia could be a stop run before a reversal.
EUR/JPY Makes Extended Third Push
The EUR/JPY made a nice long third push yesterday. Hope some of the members that caught it in the live session yesterday took a good chunk of the run. At this point I would be looking for the reversal but considering its already ran 50 pips from the lows that may be all it has so I will be open on direction. The best level to short is at 141.42 but I will be open for the long with a test of the Asia lows at 140.53 during the London session if they dont offer the short.
Forex News Today
The calendar starts off early with German Retail Sales and later their Unemployment data. I have my doubts they will be pushing on a smaller miss for these with the ECB recent statements. Otherwise later there is Euro Zone CPI data expected to drop below zero. This should already be priced in but a surprise above zero could bring some Euro strength while a disappointment the opposite as the chance for a bigger QE package from the ECB gets higher.
The US has ADP Non farm expected around 226K. Since Friday NFP and the ADP figures have been closer recently then this could move the USD around on a big miss. Anything below 200K would create USD weakness while its likely that 230k+ would keep USD strength going. There is also the FOMC meeting minutes later in the day buy I expect this to be close to what was in the statement and shouldnt surprise.
MY APOLOGIES FOR THE BROKEN VIDEO OF INSIDE JOB IN THE COMMENTARY. I DIDNT THINK I WAS COPY WRITE INFRINGING WITH AN ITALIAN VERSION ALREADY ON YOUTUBE. HOWEVER YOU CAN STILL WATCH IT AT THIS LINK. STILL A MUST SEE!
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