Daily Analysis of EUR/USD, GBP/USD May 31, 2013
We have our second long term push on the EUR/USD today. However we also have 3 intraday pushes up and considering the market has been trading off the intraday pushes more than usual I will be keeping my mind open on direction. Price has hit a significant breakout level on the daily chart and does have good potential for the reversal here. So if we get a clear stop run to the highs of 1.3060 I will be willing to short. Otherwise if we get the hourly conviction close above that level I will look for a test of the Asian highs/lows for the manipulation to take the long.
I also want to point out the hourly conviction close in yesterdays price action. The candle I am referring to is the one at the top of the red line. Notice how it closed above 4 daily highs and close to its highs. This candle shows us what the intent on direction is. It does not give an entry but knowing direction is 70% of the battle. Once this happens we wait for the trapping of traders against this conviction and take the trade. Now look at your 15 minute chart and you will see a set of the manipulation candle patterns we look for at the lows of the pullback. Since the trap occurred at a time of day that adds more risk to the trade and we had high impact news coming up I passed and missed the move. I am starting to believe more and more that the smart money has access to the news releases long before they are put out to the market. This kind of movement in price makes it hard to deny.
The GBP/USD is in the same situation as the Euro with 2 long term pushes with a possible 3 intraday so here I will be keeping an open mind on direction also. It does have some room to go up before it hits significant daily resistance. The best place to see a trap will be at the 1.5196 level for a long. There is proven support along with the 1.5200 psych level so the probability is high there. With the daily close being on its high yesterday I think the continuation up has a better chance since the US market has such conviction but I will need a clear entry. The stop run to the highs will be enough to get me short but I will be waiting for an hourly close to see if there is any conviction to the upside before I take a short. If we do get the conviction close the Asian highs and lows come into play for the trap move to get long.
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Forex News Today
The calendar is light today with no high impact events to cover for you. My thoughts are we will see more price action driven moves barring any major tape bombs. Of which there is always the possibility these days.
How Long Will This Last
Yesterday I had a conversation with a member about when the house of cards we call the global financial system will fall as all houses of cards eventually do. She thought it would be rather soon while I disagreed. the reason I think it will last possible 5-10 years is that the big boys have too much invested to let it fall and what will be the catalyst is when these same big boys start the flight for the door trying to protect what they have. Since all current market moves are due to a front running of what each central bank does these guys will continue to do the same thing until they feel the central banks have lost control. This could take a long time.
Here are a couple of videos that explain my thoughts pretty well. The first is a Rick Santelli interview talking about how rigged every market is and the second is Max Keiser episode.
Although the front end of the Max Keiser video describing the decline of the sex industry in the UK is entertaining. Its the second half that tells the story of the ponzi scheme we call the markets these days is sure to continue. How long? Well it will last as long as any other Ponzi scheme. When the new dummies coming in aren’t enough to pay off the guys at the top all Ponzi schemes implode.
I will admit I thought it would blow up long before now. However back then I was naïve enough to think the market had any common sense or better yet the guys in charge had any of the same. Of course I had to remind myself that common sense is not that common. So here we are in a situation that has potential to go on for a very long time. Enjoy.
Have a great weekend
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