Daily FX Commentary EUR/USD, GBP/USD October 4, 2012
Well as I had a suspicion we didnt see our third push on the EUR/USD yesterday. I knew something was suspect with that push to the previous Friday highs and the fact that the market couldnt close above it. This is the characteristic of a topping formation so when we see such things its difficult at best to think we should have the highest probability trade coming the next day.
Now we have what looks more like the third push chop as it formed a triangle and now has broke out of the triangle to the upside. At this point I have to treat this as the third push chop like was the case with the GBP/USD yesterday. Entries will be safest at the extremes of the high to lows formed yesterday at 1.2936 and 1.2880. I should also point out that even though it did as I expected in the October 3rd forex commentary with a nice candle formation at the 1.2880 level (give or take a few pips) it never did give the pullback for the entry. I do know w few members too it rather aggressively but I think they were stopped out break even when it came back down.
The GBP/USD had a mind of its own yesterday and at the end of the Asian session was on its lows. As I was talking to a member on skype and he asked me if I thought the high volume move with the drop just after the Asian box was a stop run. My reply was that I will be waiting for the 1hr bar to close. If it closed below the lows from Monday then I would be convinced it momentum and the probability for it going down rises substantially. Once it did make that close I was looking for the short. first at the breakout level of Mondays lows but I made it clear to him that the test of the Asian lows was also a possibility. I was waiting for our candle patterns that show us its a trap move at that point and they didnt come until it made it to the Asian lows. I am still holding 2 short positions from that level and you can see the video when I get it posted later today.
Forex News Today
Even though today is not that busy with news it is a big day having the UK Asset Purchase facility, Rate Announcement and MPC Rate Statement. Of course all eyes will be focused on the Asset Purchases at first and as long as they dont add to them the statement will be dissected for any hints of adding more purchases in the future.
Later is the ECBs turn to light up the markets with its Rate Decision and Press conference. I expect the typical Euro pump from Draghi but it does have potential to be a non event as much as a biggie. There is a possibility that they will cut the interest rate but I have my doubts they will. I expect at most to hear that they are talking about it and if that does happen will signal the more probability for a cut at the next meeting. This of course will be Euro negative.
Lastly late in the day is the Fed Meeting Minutes. This could be eventful too. What the market will be looking for are any words that imply that they may up the ante of the QEternity if conditions dont improve. To be honest I dont understand why they think things will improve until they let the market correct. However Im just a lowly forex trader that has seen every other attempt to fix the market by throwing money at it fail miserably. What was the definition of insanity again? 🙂
Italy Again Getting Some Attention
I dont mean to be picking on Italy by any stretch of the imagination. I know things are not much different in the US or anywhere else for that matter but after I posted the new Maserati the Italian ambassador was driving yesterday this just seemed fitting. The more these sort of things get out the better off we will be when the people eventually get fed up and take back their countries. This is from Reuters this morning.
The head of an Italian tax collection agency and four employees were arrested on Wednesday on charges of pocketing around 100 million euros ($129.35 million) from the money they gathered and spending it on private planes, parties and yachts.
The news will infuriate Italians who have had to dig deep to pay higher taxes, imposed to rein in the country’s massive debt, while watching a succession of scandals involving the misuse of public funds.
Tributi Italia (Italy Taxes) collected local taxes under contract for 400 town councils, but finance police in the northern city of Genoa said the agency’s boss, Giuseppe Saggese, set up a system to siphon funds into the agency’s own bank accounts.
The money was used to pay for “private planes, yachts, expensive cars, luxury holidays, extravagant parties and music concerts,” said the force in a statement. Saggese himself pocketed at least 20 million euros, it added.
Mario Monti’s technocrat government is trying to crack down on tax evasion. Resulting tough measures adopted by collection agencies have created widespread resentment.
The president of the regional government of Lazio resigned last month over a case involving embezzlement of party funds and members of the Campania, Lombardy and Calabria governments are also under investigation for misuse of public money.
Last week police raided the offices of all the political parties represented in the regional government of Piedmont, seizing documents related to expense claims dating back to 2008.
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