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Bank Of Japan Causes Market Spike – FX Market Analysis 1/29/16

January 29
00:55 2016

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EUR/USD Spikes On BOJ News

We had quite the spike on the EUR/USD after short term risk aversion took hold of the market on promised Bank of Japan intervention into the market. This is just another illustration of how fragile the global economy truly is. For today, I will still trade without a market cycle bias. Today’s new based spike down is another reason to keep an open bias as well. As most people who read these daily forex commentaries know, our trades come from a stop run of a high probability manipulation point that is likely to hold liquidity. Even if the news based push down had not occurred we really didn’t have any lower levels that satisfied the rules of our day trading strategy. To start the day I only have one upper point listed from which I would look for a valid stop run short to occur from. Any long setup will need to happen from a newly established level during the trading day.

EUR/USD Chart - January 29th 2016

GBP/USD Push Down Fails

Yesterday I was only looking for the second push to the downside and obviously the GBP/USD blew through the one upper manipulation point we had listed on the chart. This is a good example of what we want to see happen when cycle does fail. As the market came into the level it failed to produce a valid confirmation down and therefore resulted in a no trade. This is also a great example of why I always say market cycle only makes up about 10% of our trading strategy. Regardless of whether or not we have a directional bias, our entries only come from a valid stop run and confirmation off of a valid manipulation point.

For today I have one upper manipulation point and two lower listed levels. Our one upper level is quite substantial as there is no other level above it I would consider a short from other than the potential of a newly created level during the day. It would also be worth considering a backside day trade long off that level if we were to break and hold above it.

GBP/USD Chart - January 29th 2016

Forex News For January 29th 2016

US Advanced GDP q/q 8:30 AM Eastern: US GDP is another US news item that has had a very poor history of showing continued follow through in the direction of the spike. While it has been slightly better than some other recent news items, it is at best a 50/50 coin flip for continued follow through. For this release the expected number is .8%

US Chicago PMI 9:45 AM Eastern: We have had a few news releases that our on the trailing edge of their importance and therefore we have been treating them that way. Chicago PMI is one of them. In early 2015 this was a news event that I would not carry into. It is now a release that I would carry into as long as the trade was not in negative territory. 

US UoM Consumer Sentiment 10:00 AM Eastern: This has 1 spike about 3 months back that hit exactly 15 pips which is enough to keep me from holding into this release. It will probably be another US news event that will gradually loose attention, but at this time that spike is too close to ignore for me. This month 93 is the expected number.


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