Daily EUR/USD, GBP/USD Analysis February 20, 2014
With the EUR/USD only moving in a 50 pip range yesterday it leaves a bias on direction open in regards to the pushes. Its still possible that it make another push up but its best to keep an open mind on direction today. The Fed meeting Minutes yesterday did nothing but confuse the markets the way it looks as they said they are committed to the taper but if financial risks come apparent then all options are on the table. In other words if equities tank then they will reconsider but as long as the rich keep getting richer then unemployment don’t matter any more.
The best level I see for a short today is 1.3764 but with the overall highs not far away at 1.3772 they may want to run stops before a push down so I will need a good entry and trapping to take the short. I will be open for a long at yesterdays lows but again with a couple more significant levels just below it carries more risk going long from there. They will have to show me some of the typical playing of the breakout traders before I consider the long at a higher risk level. Otherwise the 1.3700 psych level is a little less risky if I miss the short entry and they run it down. If that can hold then the 1.3690 is just behind and at that point it will have run a full push down for the day and have a good probability of getting the pullback if it reaches there during the London session.
The GBP/USD made the third push down I expected yesterday. Having said that it has already made a 88 pip reversal so I will be open on direction today here also. As usual in the third push chop we have here today the safest entries are at the highs or lows but I will consider more aggressive entries at 1.6646 for a long or 1.6720 for the short. Otherwise taking an entry in between those levels carries too much risk.
I also want to address a comment made on yesterdays commentary asking about the best entry and what it looks like. The GU yesterday was a beautiful example and you can check out the blog where Allen posted a description of the trade I took for 55 pips short. I should also mention that this pair is the only one I will take entries on that close to significant news. The reason is its the only pair that has a tendency to set up beautifully before the news. On all other pairs its safer to wait until the market settles down to take an entry. Basically price came into the 1.6720 level which was also where the low of the manipulation box was yesterday. Then gave a great set of legs then as it moved up it gave more confluence with no demand before the second trapping candle pattern. As I was watching I got a message from a member saying it was probably going to run off without us and just before I replied back I entered at 1.6725 on the pullback. I put in my 20 pip stop and 55 take profit and replied that “I just got my entry so nope its not running without me”. Once the news came out it popped to the downside and I was out with my 55 pips and done for the day. Later in the day I also addressed another entry long from another member that I didn’t take but liked a lot as it was at my level for the potential long after completing the third push. Good job Kehinde. Im curious how many pips you got on that.
Forex News Today
The significant news releases start off with German Manufacturing and Services PMI figures. The Mfg. data being the one to watch expecting a small drop. If it does disappoint then we may get some Euro weakness but it will need to be big in order to create any sustained move. I have my doubts that would happen unless we get some verbal intervention talk about the Euro strength. A little later is EZ Manufacturing PMI also but if the German figures miss this will most likely get ignored.
The US has CPI data along with Thursday Unemployment Claims but with both of these largely being ignored these days due to inflation data being manipulated to show what the Fed wants it to. The Claims data has a small chance of causing some volatility with a big miss with the probability of a disappointment being much higher from what I have seen.
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