Daily EUR/USD, GBP/USD Analysis May 7, 2013
The EUR/USD has definitely gone into the chop and has even less clarity on direction today. With an 87 pip push down I would normally be bias for the next push in that direction but the support at the 4 hour 200 EMA kicked in again and it couldn’t get a close below Fridays lows so that leaves direction in doubt again. The bearish daily candle does make me think there is more potential to the downside but I am not going to take an entry on that alone. I will be keeping my options open today. The levels I will be looking at for a short start at 1.3086 but I would prefer to see the Asian session test it and see the stop run during London or see them play the breakout traders on both sides of the Asian range. Otherwise the probability of it testing the hourly 200 EMA at 1.3095 is higher. The levels I will consider a long are the 4 hour 200 EMA at 1.3053 with a stop run but I will want a good entry because of the lows just behind it at 1.3037 and the stop run there will have a better chance due to the probability of more stops being below there.
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The GBP/USD is in the same situation as the Euro today so I will be open for a trade in either direction on this pair also. There are a few more levels for the potential short and as long as the current Asian highs hold the manipulation there has potential but considering the tight Asian range I will be more confident if they play the breakout traders on both sides first. Otherwise the 1.5565 and 1.5583 levels have good potential for the short. I will consider a long from the Asian lows if we see an hourly conviction close above the Asian range during the London session but would prefer a stop run to yesterdays lows at 1.5119 if I don’t get the conviction move.
Forex News Today
In short there is almost nothing of note in the news today. There is the medium impact German Factory orders expected to drop into negative territory. If it does disappoint the Euro should weaken since as the core gets hit in Europe the chance for Super Mario cutting rates again increases. My thoughts are it would take a substantial surprise t the upside to create any sustained move.
The US has the new Treasury Secretary Lew speaking but I doubt this will have much impact if any.
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