USDX, Equity Recovery Continues May 5, 2015
Low Volume Recovery Continues With S&P Test Close To All Time Highs
Today will be the test of whether or not the low volume recovery over the last two days was due to certain markets being on holiday or if maybe there is something deeper going o. London will be back in play today but I have to admit that there were plenty enough players yesterday to get market volumes higher if there was any real conviction to these moves. In short the direction in stocks at least could be thwarted today although as usual I would expect the BTFDippers to be back in force during the NY session. Time will tell but another thing I have noticed lately regarding currencies is that the moves get much quieter when we dont have either central bank mumbo jumbo or tape bombs regarding Greece. Having said that the GBP move last week shows us that big data misses can send a pair screaming so I will be a wider on setting take profits when holding through a news release since these big disappointments in data could be a more regular occurrence.
EUR/USD Makes Second Intraday Push
The EUR/USD moved as expected with a nice 100+ pip push to the downside yesterday. The set up was great at the 1.1207 level but had to be one of those Jonny on the spot entries with no pullback. I have to admit the backside confirmation entry during the NY session was also good but again no pullback. I typically miss those trades as per my plan but I know there are some members who caught them so congrats on good trades guys.
Today I will be bias for the short again but wont have the stronger bias due to the second push scenario. It will take more than usual to get me long but I do expect a test down to the 1.1084 level to finish out these intraday pushes before they potentially run a test of the recent highs. The best level to short is 1.1181 but the daily level just below is still valid and I wouldnt be surprised to see a run to the 1.1207 either. I will only consider a long from a stop run to the lows below 1.1125 and will need to see clear trapping there if I am not already short.
GBP/USD Showing Mild Conviction South
I have to say I am not all that impressed with the GBP/USD conviction to the downside today. There was some clear hourly conviction below good daily levels but its much stronger if it does the same on the daily time frame as well. At this point direction is more unclear so I will be more open for the long from a stop run to the lows at 1.5095 but will also be looking to short from 1.5163 since its only 40 pips from current price.
EUR/JPY Shows First Push On Reversal
The EUR/JPY has shown the first push down for the reversal today so I will be bias for the short here. The best level is up at 134.40 but if they can manage to widen the Asian range without Japan open today then I will be open for the short at the Asian highs. I prefer to see them show some conviction below yesterdays lows but even if they did it would be questionable with Japanese markets closed. I will also still be open for the long with a stop run to the lows yesterday but its more likely to be driven by a Euro strength move so It would be best to see it moving with the EU.
Forex News Today
The calendar starts off with UK Construction PMI expected to drop slightly but if it follows suit with Manufacturing data last week then we could see another large GBP weakness move. I have my doubts they would push it that far again on such data but as I have said many times I dont get surprised by much these days.
The US session starts off with the Trade Balance data that I usually dont mention but these days its worth talking about because a large miss could get them rolling USD strength or weakness depending on direction. Otherwise later is ISM Non Manufacturing PMI expected to drop slightly. I dont expect much barring a big disappointment here. There is also a Fed member speech but considering they have been rather quiet lately its not likely that Kocherlakota will say much to push markets.
Asian session traders have New Zealand Employment data, Aussie Retail Sales and Chinese Services PMI data to watch tomorrow.
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