Daily Analysis of EUR/USD, GBP/USD May 9, 2013
Today the EUR/USD has had a clear first push up. Making a clean move for 120+ pips and not showing much rejection at the highs. At this point I will be cautiously bias for the second push to the upside today. With equities making new all time highs everyday the Euro is going to benefit from it so even though it is still in the chop the probabilities of it breaking to the upside now are good. Of course I will still be open to taking a short with a stop run to the highs yesterday. Otherwise what I would be happiest to see is a run up during Asia this morning and the test down into the daily close that is also the Asian lows this morning, clear out any stops below the 1.3050 level with some manipulation to start the next push up. The only problem I see is there are 2 levels just below they may want to test into before they move it off so I will also be watching the 1.3140-30 levels.
Something of note I should mention about this morning is some Chinese data being released. They have some CPI figures coming out that could spark a move on risk in a couple hours so anybody trading the Asian session should be aware of that. A surprise up will be negative while the opposite true if it drops.
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I have to admit the GBP/USD threw me for a loop yesterday. My assessment that it was in a second push scenario was proven to actually be the first long term push and it just happened to be a false one. It was a good lesson why we want to see the pushes go for the 90 pips. However in my defense the first run down did fit the three short term intraday pushes which is why it looked pretty clear to me. I did take the short from 1.5485 as it seemed they wouldn’t let it pass the level several times and the manipulation was good. However since it was a bit aggressive I watched the hourly close and once it made the close above the Asian range I manually closed the trade with a 12 pip hit. Anyway I was wrong and we never fight the smart money so on to the next trade.
Today the first long term push is what we have to deal with so I will be cautious with my bias for the long here also. Looking at the 15 minute chart the move up was nice and efficient until the last move during the US session which has already been retraced so the daily close has a good chance of seeing the manipulation today. The wider the Asian box is the better chance it has of holding and doing a stop run to the lows before the move up but if Asia cant muster a move then a run to test the 1.5520 level is likely. As always with a first push scenario there is a chance for the short but there will need to be some clear signs to change my small bias. A nice clean hourly conviction close during the London session below the 1.5531 level will do that and if that happens I will be looking at the 1.5551, 1.5565 levels for the manipulation to short from.
Forex News Today
The calendar is busier today starting off with The ECB Monthly Report. Im not expecting much from this but if there were some things discussed at the meeting that didn’t make it into the press release there could be some volatility.
The UK has there Manufacturing and Industrial Production figures expected to drop slightly but still be above the big zero. As surprise below zero has the best chance for a move down while a larger surprise up will be GBP positive. I to think they could surprise upwards but the chance for it being on the scale of what Germany saw in recent days is small so the reaction will also be small. Later is their Rate Statement and Asset Purchases. I have my doubts they will surprise this month a there has been no rhetoric regarding it lately but there is a slight chance.
The US has Thursday Unemployment data expected to add 10K to the unemployed. If it does spike higher the USD will weaken further while I am thinking it will take a large miss to the downside to create much USD strength.
Late in the London session the UK has their NEISR GDP estimate and if this misses big we will see some movement in the GBP.
Lastly today I want to leave you with an entertaining video of the Max Keiser report this week. This is a great analogy of how the markets are rigged and if you are going to be trading then you better not be fighting the smart money. What is very important to understand is when they talk about behavioral psychology and how the big boys use that to do their best to take our money. Its a well known fact to most that the markets have always been rigged but this makes the point very clear that we need to have a trade plan to keep us from getting sucked into the psychological game they play. If you haven’t seen Sterlings recent article on trade management than you can read it here along with the one on the importance of a trade plan. The bottom line here is we as traders need to be comfortable and calm when we are trading since this is the only ways to keep your emotional level in check. Enjoy the video.
This next video is a good one as well. This is an interview of Rick Santelli with the Dallas Fed Governor Fisher. The only sane member of the Fed I might add. I couldn’t agree more with the reasoning why the QEternity is not working. It has to do with the politicians having their proverbial heads up the butt and even though the print fest has stopped a crash it wont create growth until something clear comes out of Washington. In short don’t expect the print fest to stop any time soon since as we all know changes in Washington don’t come easy and when they do happen history has shown that it is usually for the worse not better.
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