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Daily Forex EUR/USD, GBP/USD Commentary October 22, 2012

October 22
00:45 2012

Today as I look at the price action on the EUR/USD it seems that its is showing a clear 3 pushes to the downside. This is true but the entire move is only 124 pips so I am more inclined to think its the first push of a larger move coming up this week. The way I will be looking to trade this pair today will be if the lows here at the hourly 200ema hold during the Asian session then the potential for a long position is good. If I do take the long then I wont be holding for more than 50 pips as I do still expect another push to the downside eventually. Having said that its fine to take trades against a first push since the potential for a deeper pullback is there before it moves off.

Of course the preferred entry would be short but it needs to show me some clear price action telling me its going to keep up the bearish tenor. An hourly candle close below the lows will suffice and then I will look for the trap move to the upside at either the Asian highs or the Thursdays lows of 1.3055 

We also have the US election fast approaching. Considering the USD on its own the potential to see this pair chop around for a week is considerable also so playing the manipulation at key levels is an option. That is more for the aggressive traders out there. 🙂

1 hour chart of EUR/USD from October 22, 2012

The GBP/USD has some clearer pushes to the downside for a total of 183 pips so the potential for the reversal here is a little more probable. We do have what looks to be a nice bottoming formation starting here during the Asian session with a stop run to the lows. What concerns me about the pushes is that the first and third are well short of the ADR. having said that they are pretty clear. I should also point out that if we do manage to hold these lows and turn then it will most likely drag the EUR/USD with it depending on how the EUR/GBP feels today.  

Its a bit more risky to take trades during the Asian session. However with a clear trap move to those lows it will be a low risk trade if I can get a price around the 1.5990 area. I will most likely wait until this next hourly candle closes to be on the safe side though. If it does manage to close below the lows from Friday that will show the conviction to the downside and negate the bottoming formation. Obviously its fighting the psych level of 1.600 and we always expect some sort of reaction at those levels so that may be all we are seeing here. What will make it more clear is some candle formations showing the trapping of traders at the level.

1 hour GBP/USD chart from October 22, 2012

Forex News Today

Today is not only the typically slow Monday for new but its actually non existent. Of course we could have the typical tape bombs from the Euro Zone. However with the last EU Summit not going so well and giving the usual Euro pump the likelihood of any tape bomb being positive is lower.

We also have the regional elections starting up for Spain today. These have good potential to create some volatility as they come in. at this point the probability is for euro negative news to come through if we see the separatist parties gaining power in the larger provinces. What this will mean if they do gain more power is that we will probably see the succession vote to on next month as at least one of these regions has already been preparing.

What strikes me as funny is that these regions are acting just like Spain as a whole when it comes to the much needed (although denied) bailout. Each one of these provinces needs a substantial cash injection from the Spanish government but they want the money with no strings. Sound familiar? So what we have is a government that is not willing to bailout the regions without conditions all the while that same government is holding out for the fear of contagion to Italy when things go south for Spain. Therefore they can negotiate to get better terms from the Troika when the proverbial s#!t hits the fan and threatens to take the Euro Zone down along with Spain.

And these people we elect as part of a so called democratic process say they have our best interests at heart. What a load of crap. The way I see it is they are only concerned with lining their pockets with other peoples money while they hold on to power for as long as possible. I can only hope I am wrong but I highly doubt that I am.

Happy Trading


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  1. External Floppy Drive
    External Floppy Drive October 25, 09:52

    Thank you so much for sharing such an information-packed and insightful post with us. The uncertainties of FOREX market can even defeat the most frugal so information like this is so very useful.

    Reply to this comment

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