Daily EUR/USD, GBP/USD, Gold Analysis May 16, 2014
The EUR/USD made an extended push to the downside yesterday promptly making the reversal as well thanks to some negative Philly Fed figures. At this point its best to be open on direction as they figure out which direction they will be pushing next. With the fundamental picture deteriorating in both Europe and the US they will most likely be holding this daily 300+ pip range. Therefore the long does have a better probability since it is at the lows of the range and showing a hard daily rejection here. Having said that being it is also Friday the chance of them making a decent push goes down as well considering all the questions with no viable answers they are faced with.
The best level I see for a long here is the 1.3700 psych level where it has held for the last few days. They could push it as low as the April monthly lows at 1.3671 so I will be open for the long there as well. I do have my doubts they will push it that low with all things considered but its possible. As for taking a short on this pair the best levels are 1.3730 and just above at 1.3747 but I will be cautious on holding them if it don’t move off in the couple hours after entry and only look for profit if twice my risk on any shorts. I do prefer the long today but don’t have a clear reason to be bias.
The GBP/USD showed a weak third push but the first push up after gives me a bias for the next push to the upside today. This USD weakness agrees with the higher probability of the EU going up as well. The best level for a long is 1.6775 but I am concerned with its proximity to current price. I would much rather see them hold it up during Asia before testing there during London or the chance they will test down to 1.6752 goes up. I will be open for the short with this potentially a false first push at yesterdays highs but would prefer to be long waiting for the break to the upside if it gets there.
Looking at the daily chart of gold they seem to be undecided on direction they will let this run as well. I do find it a little suspicious that it got a beat down as the USD weakened on the bad Philly fed data but that seems to be the normal reaction these days since they have quite a bit invested in keeping gold prices down as the USD weakens.
With the way gold has been moving as of late its best to keep an open mind on direction. Having said that it sure seems as though there is some pressure building with the triangle on the daily chart. In a normal scenario I would be thinking that as they hammer these lows with less and les momentum to push up that the break to the downside seems more imminent. However with the fundamental picture in the world deteriorating there is a good possibility that the naked shorts they use to push price down with could easily get hammered if things start sliding downhill at a faster rate driving a rush to hold physical gold again. What would be the clincher of the deal is if or more like when the Comex cant make a required delivery on physical and the word actually gets out. Considering the main stream media would do their best to keep that on the down low we may just see the spike before we hear the news unless we are looking at alternative sources to find it.
The whole point of my ramble is for now I will only be looking at the most significant levels to trade it in either direction keeping in mind that if it breaks up there will be a beat down as central banks print and sell naked shorts. While any break to the downside as they scare weak holders out will be bought up as gold is still seen as a great deal at these prices to most that want to hold physical as protection against the potential for fiat currencies taking a major hit down the road. The one major difference to past hyperinflation situations in history and what we are having today is that back then it was only one or two countries that were in so much trouble they felt they could print the problem away. Now we have literally almost every country on the planet printing which changes the dynamic of the whole situation, more or less meaning that this could and will probably go on for a very long time. The question is what will cause the correction? I have come to he conclusion that the print fest has been mainly to keep the masses happy even though the rich get richer while middle class and poor get poorer. Eventually enough of the people will be angry and civil unrest will start (actually it already has in a few countries around the world) in the US and more so than now in Europe. Check out the blog for a must see Max Keiser episode describing the corruption in the UK that goes right up to David Cameron and his top financial advisor. Once more news like this is exposed (as we now they have most likely just scratched the surface) the civil unrest may gain speed.
At this point the level I will be watching for a short on gold are the 1300.00 where the four hour 200 is and 1290.42 for the long, there are some less significant levels in between but these have the highest probability for seeing good manipulation patterns. As I was telling members in the London training session gold seems to manipulate at a price area rather than run stops before the push so if I see a clear set up in the upper or lower ranges I will be willing to take the entry.
Forex News Today
The calendar is rather dead during the London session today. I have my doubts French Non Farm figures will do much barring a very large miss and even then be used for manipulation rather than direction.
The US has Building Permits, Housing starts and Michigan Consumer Sentiment. With these three releases being more or less a joke these days I have my doubts they will do much to inspire thoughts of Yellen tapering the taper or firing up the press again. However in normal situations if the Permits and Starts do miss to the upside big then they would have a chance. Otherwise as long as they are close to expectations they wont move the USD much.
Have a great weekend
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