September 3, 2013 EUR/USD, GBP/USD Daily Analysis
The EUR/USD did not make the reversal yesterday and has remained in the third push chop so I will not have a bias for today on this pair. there are a couple things that stick out with the price action that give some clues though. They are the fact it couldn’t make the push through the breakout level from Thursdays lows to try and test the third push highs around 1.3250. This tells me there was not much interest in making the full blown reversal. However since yesterday was Labor Day in the US it may not mean as much since we didn’t get the US ramp up from them later in the day.
The best level to short from today will be yesterdays highs around 1.3220 but if they do push down and make a conviction close during the London session below Fridays lows I will have the short bias and look for the continuation. More than likely from the lows yesterday but will consider Fridays lows if the push through is deep enough. My only consideration for a long will be the stop run below Fridays lows with some clear trapping going on. Preferably after we see them play the breakout traders to the Asian highs.
The GBP/USD made the move I expected after making the hourly close above 1.5547 level. As I mentioned in yesterdays commentary I am never that impressed with them during the Asian session but once it continued to have a couple more closes above the level during the London session it was clear they would most likely test the highs at 1.5591. I was talking with a member in the Skype group who had asked me about the short he was in from around 1.5550. I could see why he was in the trade but had to tell him I didn’t like the short due to those hourly closes above a very significant level. About 15 minutes later the UK PMI data came out and sure enough they spiked it 40 pips right up to 1.5592.
I did see that there were some members who did catch the long and booked the 40 pips so good job guys and let this be a lesson to those who don’t pay more attention to them hourly closes during the London session 😉
Today I will be looking at this pair as having a first push up but cautious due to the strong reversal to the downside yesterday. I’m not impressed with the move since the breakout level couldn’t hold later in the day so this does have more than the usual potential to be a false push to the upside. If it can manage to get an hourly close above 1.5556 during the London session I will be more convinced but its not looking good at the moment. Otherwise I would prefer to see them play some breakout traders like they seem to be now and run stops below 1.5530 with a trap for the long from there during London today.
I will be open for the short if one of two scenarios play out. First being seeing the play of breakout traders to the lows and depending on the size of the Asian range either look to see the same at the highs or if the Asian range widens out enough I will consider a clear trap forming at the 1.5547 area. Of course needing a great entry due to the aggressive nature of a short from that level.
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Forex News Today
The calendar today is rather light with only the UK housing data during the London session in the form of Construction PMI. Its expected to rise some but I think its already priced in so baring a large miss we wont get much but a chance for them to manipulate and take some stops.
The US has its ISM Manufacturing Index a couple hours after the US open expected to drop a bit. Since it is still well above the 50 level I don’t think we will get much here either. If it can surprise upward we may get some taper thoughts and USD strength and a miss to the downside the opposite but either will have to be substantial to create a sustained move.
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