Stock Exchange Halted Amid Risk Aversion – July 9th 2015
The stock halt today that was caused by a “technical” issue was quite convenient if I do say so myself. As markets around the globe continue to have overall risk aversion sentiment I will be expecting more “technical” issues, especially during a crash. As I mentioned in yesterday’s forex market commentary, we had a glimmer of hope with a large daily stop run potentially setting up. Today all but dashed that hope. A close below the stop run lows will signal a very high probability for longer term downside. That did not occur today, but it came very very close. Because today did not confirm the previous days potential stop run I would be very surprised if we did not see further downside for the rest of the week. Right now the Chinese stock market is in focus and without a rally abroad I don’t expect US equities to fare well after today’s move.
EUR/USD Approaching Short Term ‘Line In The Sand’
For me the 1.1085 level is the Euro’s current short term line in the sand. A big stop run of this level will likely send the Euro down for the rest of the day. On the other hand if the Euro breaks through, holds, and then retests on the backside of the level then the long becomes the likely option. Bottom line 1.1085 is the most important level to watch today for the EUR/USD. Today the Euro did produce 2 nice stop run reversal day trade setups, one of which was from this level…for those who are members make sure to watch the daily market review for a further breakdown of that trade.
GBP/USD Makes Another Leg Down
As I wrote in yesterday’s commentary I felt like the push down was the higher probability and that was indeed what we got. To be honest I’m a bit surprised this push down has been so aggressive with the way the COT data was setting up. I expected a retracement, but this has been more aggressive than expected. An important point about any long term perspective is you have to let it begin to do what you expect before trading it. Another words I’m not going to be buying the drop expecting the longer term turn. Any long at this point will be a short term trade until the market shows that is is potentially rolling over.
With a two day push that is approaching 300 pips, I’m going to be open on direction for the short term. A long off the lows becomes more attractive at this point because there is no other level around. For any trader that got long the GBP/USD during the New York Session to now, where do you think their stop would be located?? With that thought in mind the lows become a very attractive level for smart money to create a stop run. As always we need the verification once the market reaches any level before taking the trade.
Forex News For July 9th 2015
UK Official Bank Rate – Today we have a interest rate decision at 7AM Eastern. 99.9% chance this remains unchanged but as always if I was in a GBP/USD trade I would be exiting ahead of this news. I don’t carry going into any news that is CAPABLE of spiking the market more than 15 pips. Can you imagine how many people would have been saved if they applied this rule during the SNB meeting a few months back that ruined thousands of traders?
US Unemployment Claims – This is a non event. The pairs that should see the largest spike will be Yen crosses. Bottom line is we would have to see a huge deviation from expected for this to do anything exciting.