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Daily EUR/USD, GBP/USD Forex Commentary November 8, 2012

November 08
01:54 2012

Tuesday I was asked by a few of the members how I thought the election would effect the market. Even though it wasn’t spot on, eventually the market did come around and actually give pushed to the downside as I thought. What most likely caused the initial push up was smart money using the euphoria of “Obummer” winning as a false push up to trap traders long. They then proceeded to sell the EUR/USD along with stocks realizing we will get more of the same for the next 4 years and nothing will actually get fixed. I could go on and on about what a farce the elections are but I wont. Suffice it to say the market did as I expected eventually, and I did manage to book 106 pips on a EUR/USD short yesterday. I did manage to catch it on video, but it wont be posted until later today or tomorrow.

Anyway what we are looking at today is a false push to the upside and a first push down so I will be expecting a second push today. There is a slight chance that we could see a deeper pullback first in an attempt to close the inefficient move down. However considering that the last inefficient move was closing a previous one, it will probably take more time or not make the attempt at all.

We do already have a test of the Asian session lows from yesterday that has been rejected so the first place I will be looking for the manipulation will be the Asian highs today around the 1.2780 level. If we do get a push down with that famous hourly close below yesterdays lows before the London session starts then we have a higher chance of seeing the Euro run off without an entry. However I’m not really worried since I am already up 17% this month and in no hurry to give anything back. 🙂

1 hour chart of the EUR/USD on Nov. 8, 2012

The GBP/USD is showing almost the same false push. However it hasn’t been confirmed yet with the hourly close below the third push chop. At this point direction is not clear so we have to treat it skeptically. I will be a bit cautious with taking any long from the lows on the EUR/USD at its current location. If it does break lower then it will most likely drag the GBP/USD with it. The Euro is clearly the weaker currency so I will be keeping an eye on the EUR/GBP as well. The safest place for entries on the Pound will be a long at the lows which is the 1.5950 level…preferably with a one hour stop run.

The other option is a short from the highs of 1.6040 level. Having said that, considering the rejection seen on the daily chart we may only get the manipulation back up to the highs during the US session yesterday at the psych level of 1.6000. This would be a more aggressive entry, and usually recommend not taking trades in the middle of a third push chop since it does carry a much higher risk.

Forex News Today

News looks to be busy today but there is only the rate decisions from the ECB and BOE that is of any significance. The BOE is up first and we should watch for any additions to the Asset Purchase Facility. I highly doubt they will do anything this time with the better than expected GDP figures they had. So next will be the interest rate statement. If they do hint at more purchases next time on weakening data then it will most likely be slightly GBP negative. We will then have to watch the upcoming data for disappointments.

The ECB announces about 45 minutes later but the big one as usual will be the press conference later. I expect Draghi to try the typical Euro pump but he has been running out of hot air lately so I don’t expect much. Of course it will be a bit volatile as usual so be careful during the early part of the New York trading session. I think the biggest potential surprise is any news that Spain is bellying up to the bar and asking for the bailout. However I have my doubts that will happen anytime soon either.

The US has  Trade Balance and Unemployment Claims, and the most important of the two being the Unemployment numbers. I doubt there will be much deviation this release but there has been some  announcements of big companies such as Boeing planning to lay off several thousand workers. Next month may prove to be interesting.

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Greece Passed the More Austerity for Cash Bill

When I said that yesterday would be more interesting because of the Greek vote I couldn’t have been more wrong. Its kind of funny because the vote passed and there was little to no reaction. Its better though to be cautious than reckless. I expected at least some soft of a bounce and we got nothing. If it would have failed however we would have seen the Euro tank across the board, but the little blip for the passing makes me laugh. Maybe its because of what they had to do to get it passed. I think you will enjoy this one. Of course that is if your not a Greek. No offense to our Greek members 🙂

This was posted to Zero Hedge along with the same video that I posted in the March 26, 2012 commentary. I would post it again but I have already reposted it once. If you need a good laugh just go to the link.

Just in case someone thought Greece would voluntarily vote to cut out the funding – any funding – of free money from the ECB, via ELA or otherwise, regardless if only 10% of said money actually makes it into Greek society, we have some bad news: the Greek parliament once again voted to impose austerity upon itself. This includes numerous Yay votes by deputes who had said previously they would vote against the measure.


And yes, this time will certainly be different unlike all those other times. Or maybe not. In the meantime, the rioting, and daily strikes by everyone, most certainly the tax collectors, will continue indefinitely, until even more spending has to be cut to match the decline in revenues, and so on, until finally the singularity of no more revenues and no more spending is hit.

Until then, the main resurgent sponsor of any business venture will be, as reported earlier, local brothels.

Now the ball is back in Germany’s, and Troika’s, court to come up with further conditions to not disburse the €31.5 billion in addition aid, which judging by the EURUSD’s exuberant response (+2 pips), will be quite copious.

They had to boot all the guys in the 2 majority parties that weren’t going to tow the line? Talk about democracy being slain in its founding country. What is going on in this world?

Happy Trading


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  1. alex123
    alex123 November 08, 15:45

    Hi Chad, the fact that politicians lie is no surprise but when they make it so obvious who do they think they are kidding? This from
    At least the EU seems to be going down on this news and US stocks with it.

    Reply to this comment

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