Analysis of EUR/USD, GBP/USD on March 28, 2013
We have gotten what looks to be the clear second push on the EUR/USD yesterday. It never did reach the level I expected to see the manipulation at and pretty much ran off directly out of the Asian session box, gave one look back and took off to the downside. Even though the pushes are clear and I will have a bias to the downside today I also want to point out the potential for the reversal. The reason is it has fulfilled the pip count and time scale for what we expect to see in these 2 pushes having moved 300 pips over 3 days.
The first place I will be looking to short is the highs during the US session but this is not as significant of a level since there is just about no reaction to it in the past. My expectation is to see it push past there and stop either at the 1.2800 or the most significant level on the chart around 1.2827. That is a break out level from November last year along with the support it broke yesterday so a test of that level may be in order if they intend to keep up on the clear third push. Otherwise if I do see they clearly intend to hold the lows with some nice rejection and hopefully a stop run I will be willing to take the risk on a long position.
The GBP/USD hit the manipulation level I expected yesterday at the 200 EMA on the 15 minute chart for the short with some semi clear manipulation after the 2 pins. What I really liked about this trade was before it came up to test the 200 they also took out the break out traders to the lows of the Asian session. When we see this it will take some of the aggression out of trading off the 2 pins since that is mediocre manipulation. We always expect some reaction at these levels and that does not always mean manipulation so having more to show there is really manipulation going on is always warranted. Good job to the several members who took this trade. I will say a couple of you took it too early using just the potential stop run above the Asian highs so be more patient in the future or it will eventually bite you.
Today the cleanest way to look at this pair is the 3 pushes down have occurred and the reversal is underway. Even though the second push was shy, with the price action yesterday it looks rather clean now. The question to answer today is will this be a false push before continuation or a full blown 3 push reversal. My thoughts are for the false push but that is no reason to take an entry. Right now we are getting the reaction at the 15 minute 200 EMA coinciding with the break out level yesterday so I will be watching to see if this holds during Asia and what sort of reaction we see during London today. A clean stop run to the level after a small pullback during Asia or London will be good for a short but the manipulation will need to be clear. Otherwise they may also test up into the 1.5171 level again. Of course I will consider a long position but the levels aren’t that great. The 1.5123 looks the best but I am not that impressed with it.
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Forex News Today
The calendar during the London session is rather bare. There is German Retail Sales and Unemployment figures but the only one I see having potential for increased volatility is the Unemployment data with a large miss. The chance of this is low though.
The US is a bit busier with the weekly Unemployment Claims expected to rise slightly. Along with quarterly GDP data expected to rise from 0.1 to 0.5%. As usual we will need a big miss to get much from these but a big spike in Unemployment Claims has the best chance of creating some USD weakness. Later is the Chicago PMI data expected to drop a bit but still remain well above the 50 expansion level so it will take a large miss to make much of a ruckus also.
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