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USD Takes Back All End Of Week Losses – September 21st 2015 FX Market Analysis

Friday the USD took back all its losses it gave it gave up on Thursday. If you go back and read the Fx commentary from Friday I wrote, ” If we see heavy risk aversion take hold today’s move could shift as quickly as it occurred.” This risk aversion is exactly what we had on Friday as safe assets gained in value and equities sold off. While the market may take the move to not hike as a good thing, we may be coming to the end of low interest rates being a good thing. Eventually the market is going to sell off regardless of what the Fed does. I hope that time is not now for the sake of most everyone. The fact is 95% of people in the developed world would have a difficult time simply living through a great depression type scenario. This coming week is going to be extremely important. Be sure to watch US Equities and the correlation they will have to the EUR/USD and GBP/USD, especially if heavy volatility hits the market once again.

EUR/USD Still Holding Hourly Trend

At this point the EUR/USD is still holding the hourly trend to the upside. For today I will still be open on direction and take any valid stop run reversal trade setup from a pre-selected level. With that being said I do however favor the continued push down. In my opinion Friday’s move is telling us the market doesn’t trust that move and continuation off of that type of complete reversal is very likely. It is important to note that the continuation does not necessarily have to come today and we could see a slight retrace before the move down occurs…if it is going to occur that is.

Last week we had continued selling that was shown in the COT data. Before the directional bias can be truly confirmed we need to break the daily trend we have been holding to the upside. Once we break that trend to the downside and then test the backside of it I will have a very strong bias for further long term continuation down. For an illustration of what I mean look at the daily chart of the EUR/USD below. Its also important to remember that the daily chart below is one possibility and must begin to occur before as illustrated before it means anything. To reiterate short term bias, trade direction remains open from the pre-selected manipulation points.

EUR/USD Daily Chart Setup

EUR/USD Chart - September 21st 2015


GBP/USD Gives Potential First Push Down

One interesting thing we have on the Pound is that the ‘Asset’ class section of the COT report is at its most bearish point in over 10 years. Additionally if you look at a daily chart of the GBP/USD you will notice that we have now made a full retrace back into the range that we had from the middle of July to the middle of August. If you notice the market then created a false push up out of that range and then got slammed to the downside thus showing us smart money had been likely accumulating a short position through that time.

The reason that this is important for us now is because what occurred before will likely occur again if the price reaches that same level. If you notice the GBP/USD is right back into the same price point as before. If they were selling through this area in the past then the Pound will likely get sold off on this retest. Like every other setup we take we need to narrow this down to a smaller trade setup. A long term picture or idea is not a trading entry signal, rather it is an opinion I then carry over to the short term chart where I still need to see a short term stop run before entering the trade.

GBP/USD Daily Chart

Today I will be looking for the second push to the downside on the GBP/USD. On Friday the Pound made a very clear rejection of higher prices and a complete retrace of Thursday’s move up after the Fed failed to hike rates. At this point I favor the continued push to the downside from one of the pre-selected manipulation points listed. It is important to note that we have a lot of empty space in between levels and thus we could see a new manipulation point form in between levels if the first point is not used. For any members make sure to watch tonight’s video daily market preview for a full break down on some new levels we have potentially forming at the moment.

GBP/USD Chart - September 21st 2015

Forex News For September 21st 2015

For today as well as Tuesday we have no economic data that is likely to cause a large enough spike to worry. At this point I think general risk aversion or risk appetite is the biggest outside factor to watch. If your trading the London session make sure to watch world equities as well as US equity futures for any major movement. I say major movement because correlation is unlikely to occur unless it is major. Another key is watching gold and silver. If they begin to aggressively surge in a equity sell of then you are more than likely going to see continued risk aversion which historically send the EUR/USD and GBP/USD to the downside as we had Friday.


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