Daily Forex Commentary EUR/USD, GBP/USD, GBP/JPY April 19, 2012
I sure hope some of you caught that move on the GBP/JPY yesterday. At the start of the European market I saw that it was at its highs of the day and London rarely just continues with a move like that from Asia. There were 3 intraday pushes to the upside and had the pin so I took the short expecting only 30-50 pips and sure enough it gave up 40 before it started to form the pins to the lows. Once they formed I exited with 30+ pips. I figured after the first pin it would make another test, so I set a pending order long at 129.20 and that sucker came down and missed me by 2 pips. (half my spread) OUCH! The GBP/USD did as expected also and had a nice stop run into the 200emas on both the hourly and 15min charts. However the EUR/USD had some fundamentals come into the picture with yields rising for Spanish debt again so there was some fleeing from the Euro. I have been warning that this was destine to happen but we never know when.
Today the picture on the EUR/USD is pretty much the same and could go either way. I will be ignoring this pair today unless there is a bunch of confluence factors that warrant a trade. It sure seems like the market is rather confused on direction here but should the ECB start buying Spanish debt again then those yields will drop and the Euro get a bid. We did have an ECB board member say that the bond buying program at the ECB is not over but remember its Germany who really runs the ECB and has been against buying government debt all along. having said that I dont think they will have much choice in the near future so watch out for that.
The GBP/USD was not the most beautiful trade but there are times that they dont manipulate at all and I totally miss those trades. The entry had to be an aggressive one unless it was taken after the clear hourly stop run reversal at the 200ema. As for today the reversal is the higher probability trade but watch out for a stop run to the highs as this could happen before the move down. A clear trap move to yesterdays high would make me most happy to go ahead and short this pair today.
The GBP/JPY was a much nicer entry even though it missed my pending order by 2 darn pips. Today is going to be a bit more tricky though. As I type is has blown through a topping formation and showing it may have more potential upside in it. I do feel that the reversal is the higher probability trade at this point but want to see a clear stop run to the highs and some confluence of factors in order to take the short today. I am also open for the long here should the USD/JPY break it topping formation to the upside also.
Forex News Today:
The major news coming from the Euro Zone today is the Spanish 10yr bond auction. There is not a scheduled release time but most bond auctions start early in the day and depending on how they go the results are sometime around noon London time. I will be keeping an ear to my Talking Forex today to try and catch it but the price movement in the Euro will be a sure tell for it. The way I see it is the auction earlier did go a little better than expected but yields have not dropped all that much and concern there was enough to keep the EUR/USD in a slump most of yesterday until the US market opened. However the fast push up during the US session could have easily been due to more repatriation since US equities dropped as the EUR/USD went up. I do expect that if the Spanish auction does go bad the ECB will step in and buy to keep yields from getting to high. We will just have to wait and see.
The news from the US is light but does have Existing Home Sales and Philly Fed Manufacturing. Home sales are expected to rise and if this disappoints then I am thinking risk will be off and the risk currencies will drop. It seems like the QE or no QE trade is off for the time being so we should be back to risk on or off trading. the Philly numbers are expected to go down so unless there is a big surprise this news event shouldnt have much effect.
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