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Risk Aversion Currencies Strengthening – Forex Analysis 1/21/16

EUR/USD & GBP/USD Starting To Look Heavy

Today’s market commentary is going to be a little different as I’m combining both pairs under one section. As of right now we are right on the verge of some serious risk aversion hitting the market. Equities broke the August 2015 lows and there was quite a bit of volatility for anyone who was day trading stocks. The volatility will likely trickle over the forex market if we do not see equities hold the August 2015 lows. This generally means USD and JPY strength historically. As of right now the Swissy is no longer a risk aversion gained but that could quickly change. Because the EUR/USD has been moving up the EUR/JPY has been held up as well while most other Yen crosses have gotten smashed. Therefore the EUR/JPY is a very interesting pair right now and I would be looking to short any stop run of a valid upper manipulation point. If you do not understand the process of selecting manipulation points this is something we cover in the DTFL online forex course.

For today I will be trading with an open directional bias on both the EUR/USD and GBP/USD as both pairs do not meet the criteria we use for short term market cycles. As such, I have both upper and lower manipulation points for the two pairs, and I will be taking any valid stop run from the listed levels. With that being said, as I talked about earlier in the week I do favor further downside, especially in the EUR/USD. As always, an opinion is not a reason to place a trade and a valid stop run of an upper manipulation point will be required to get short. As always, both charts have the current pre-selected manipulation points listed.


EUR/USD Chart - January 21st 2016


GBP/USD Chart - January 21st 2016

Forex News For January 21st 2016

EU Interest Rate Decision 7:45 AM Eastern: As always the interest rate decision is likely to be a non event as rates are expected to remain unchanged. With that being said I would still not carry a trade into the release.

ECB Press Conference 8:30 AM Eastern: This will be where the fireworks are. Given the current situation in the Euro zone the surprise should be to the downside. I personally do not trade during this time as I feel there are too many unknowns that can otherwise effect a perfectly sound trade. 


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