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Daily EUR/USD, GBP/USD, EUR/JPY July 28, 2014 Analysis

July 27
23:50 2014

The EUR/USD managed to make a push to the downside Friday. With the German IFO figures being much worse than expected the probability has gone up that the Bundesbank will soften its stance a little on full blown QE from the ECB. Im still thinking they will hold out for as long as possible but eventually they will find a way to print within the ECB mandate.

I will have the bias for the short today expecting a run down to the 1.3400 area before a some daily support kicks in. The best level right now is up at 1.3454 considering how close the lower level at 1.3442 is to current price. There is the slight possibility that this is a fake out to the lows so I will be open for the long but will have to see  something worth changing my bias over all the while watching for any sign of conviction below Fridays lows which would solidify my bias for the short.

EU 1hr chart

The GBP/USD didn’t show anything resembling a push Friday but with the way this pair has been moving from the highs Wednesday I will still be bias for the short today. Of course it will be a little weaker but even though its sort of rare that they do the three pushes over five days it does happen. The best level for the short is at 1.6994 or just above if they want to hit stops. If it does show conviction above there I will stay out since the next levels are close, then runs to 1.7022 I will consider the short from there during the NY session.

GU 1hr chart

The move down in the EUR/JPY Friday seemed inevitable after the bad German data. I did like the long set up rather well before the news but when it was coming back for my entry on the news candle and I had seen how bad the release was I decided to stay out. Something that big is definitely what we can potentially trend changing news. Especially since it was only trending up the prior day.

Now with it in chop mode more or less its best to remain open on direction. If we do see conviction below Fridays lows I will be bias for the short considering we do have the first intraday push down. Having said that as I look at all the Yen crosses it don’t look like anything will be setting up in the near future. If there is that conviction then the best level to short is 136.74 but with the Asian highs just below its doubtful they will let it run beyond unless they really want those stops above. The only way I will consider a long today is having the Friday lows hold during Asia and seeing typical playing of breakout traders along with a stop run to the lows.

EJ 1hr chart

Forex News Today

The calendar is quiet during the London session today while the US has Pending Home Sales during the NY session. Expectations are for a steep drop so setting the bar that low tells me the potential for an upward surprise is more likely. However with the tanking of New Home Sales last week I think it may be rather close.

Yen traders trading during the Asian session tomorrow only have Japanese retail sales to deal with. Expecting a slight drop, if it can manage to pop above zero the JPY could strengthen but I have my doubts the release will be that good.

Happy Trading



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