Daily EUR/USD, GBP/USD Analysis September 2, 2013
I don’t know about you guys but I am so glad August is over. Now the markets should get back to more of the new normal we have had to get used to. Well at least the volume should return for the most part even though they are so skewed these days to be trading on what the Fed will or wont do in the future. It should actually be a rather interesting month since they are on the hot seat in coming weeks along with the change in the Fed Chairman and German elections. Interesting may be an understatement.
The Euro completed the third push Friday for a nice 80+ pip run and I will expect the reversal today but still keeping my mind open for the short and extended pushes. It did manage to close above Thursdays lows but this gap down this morning followed by the continuation does tell me things are not looking good for the Euro. Most of this was due to the GBP strength as we can see from the EUR/GBP soaking up most of the move and the GBP/USD gaping up in the opposite direction. This tells us that it wasn’t necessarily USD strength. Having said that the directional bias after the GU gapped up does show some USD strength which is why I will still be open for the short with the right set up.
The best level to take the long will be the stop run to the lows of 1.3172 and if it gets there I will also be watching the hourly conviction to tell me they are still going south. Otherwise I will consider the short if I see them play the breakout traders to the Asian lows and then push up to either the highs around 1.3221 if the range is tight. If they do extend the range this morning I will also consider the middle of the range with the right price action.
The GBP/USD is going somewhat nuts for the Asian session this morning mainly due to the EUR/GBP as I mentioned above showing GBP strength along with the Euro weakness. This looks to be one of those days where we will see the EU and GU run opposite directions. If we can get the hourly close above the 1.5547 level during the London session it will most likely rise and potentially test 1.5591 today. There is a decent chance it would drag the EUR/USD with it so I will be watching the EG for decent support that can turn it and look for the EU long in that situation. I never like these days when these two pairs run opposite direction since its much harder to decide which pair to trade. At this time it looks as the GU will be best to trade the continuation after a pullback during the London session but we will have to wait and see how price runs. If I cant catch the long then the place I will consider the short is 1.5592 area for a pullback for 40-50 pips.
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Forex News Today
With the war drums getting quieter since Obummer sent the request off to congress like he should have done in the beginning I have my doubts they will give him the green light to attack Syria this time around anyway. The majority of Americans are against it and I really don’t thing they are willing to risk their jobs on another military blunder in the US.
Having said that the economic calendar is light with only Manufacturing PMI data from Italy, France, Germany and the EZ. Expectations are for mostly the same as last time with the exception of an improvement from Italy. At this point I expect them to come out inline or close so I’m not expecting much. If there is a big surprise then we may see some manipulation.
We also have Manufacturing PMI from the UK expected to improve also but with the movement we have seen this morning I think they may have already made up their mind on direction or they already have the release in their hands and pulling a fast one with the push up. We will have to wait and see.
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