Analysis of EUR/USD, GBP/USD June 3, 2013
We did get the reversal off the three intraday pushes Friday on the EUR/USD. Now we have the first intraday push down and I will have a small bias for the continuation. If they do plan to move it down today I expect the 1.3015 level to hold. In reality it is still in a third push chop situation so it wont take much to change my bias to a long. If I see an hourly conviction close or they play the London breakout traders I will be happy to look for the long. The price action will need to be rather clear though. I expect something to the effect of stopping out the break out traders to the Asian high and then run to the 4hr 200EMA at 1.2978 before we see some manipulation for the long. If I see the Asian session extend the range beyond 35 pips then things will change a little regarding the levels but will still be looking for some clear signs of direction before I look for the manipulation.
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The GBP/USD did almost the same thing but took more time to make the break down due to the EUR/GBP going on a tear Friday and making a push to the downside. Once it reached its ADR and turned the GBP/USD was able to break to the downside during the US session. I did take the short on this pair from 1.5217 for 55 pips after the no demand candle that followed the rather ugly set of legs to the highs. I did have to let aggressive Chad out of the box a bit on this trade because my stop was just at the highs and not that safe along with the fact, as most members know, I really like to see nicer legs than what was there to be sure the direction is correct. What helped me feel more confident was there were also 2 pins that attempted but failed to make higher highs.
Today I will be open on direction for the most part as with the Euro. There is the first intraday push and I will be slightly bearish but its best to keep an open mind in these situations. At this point I will expect the 1.5225 level to hold but will be ready to see a stop run above 1.5237 for a short at the same time watching for the hourly close above. What I will want to see for a long is a convincing hourly conviction close above the Asian highs during the London session and will look for the pullback and manipulation either at the Asian highs/lows to trade from. The thing is the levels on this pair are really not that great so be careful with this pair.
Forex News Today
The calendar is a bit light today but there is big news from China this morning that could set the tone for the day. Their HSBC Manufacturing PMI is due in an hour or so. Expected at 49.6 if it drops further we should see risk off while a surprise close to 50 has a good chance of generating a risk on scenario expecting yet again that China could somehow pull the world out of this hole. I think we all know better but what the market does isn’t that logical most of the time.
The Euro Zone has Italian French, German and EZ Manufacturing PMI figures also. Expectations are for mostly flat figures so again the one that will be looked at for a decent surprise is Germany. Being at 49 with expectations the same a jump close to 50 will be positive while a smaller miss to the downside will be seen more negative the way I see it.
The UK also has its Manufacturing PMI expected to get to the 50 level so it will need to surprise above to be positive while again a smaller miss to the downside will be more negative.
The US has the ISM Manufacturing Index expected to drop slightly. In order to create a sustained move down for the USD we will need a drop below 50. Otherwise my thoughts are it will take a larger surprise upward to get sustained USD strength.
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