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Daily FX EUR/USD, GBP/USD Analysis December 14, 2012

December 14
02:50 2012

The EUR/USD has established its range for the third push chop now and I am still looking for the reversal short. There is a chance that it could push up to the daily level of 1.3120 still so I am being cautious. During the live training room yesterday I didn’t take the aggressive short entry around 1.3096. There was some confluence with 3 intraday pushes up but as I always tell members, the more you have to work to see the trade the less reliable they are. Therefore I passed on the entry short around 1.3100 as I wanted a clearer pin bar when we tested that level which we did not get. If that candle would have closed as a nice pin bar I would have been all over it. At that point it was simply too aggressive for me. So I watched it run 50 pips with out me 🙂

I did however catch the NY reversal at the end of the NY box. Since I was already up late answering some emails, when price started to reach the highs of the day at the end of the NY box I took the short. The risk seemed lower at this point because London is getting ready to close. At this point the chance of the New York market by its self making the push to new highs is less likely without some news to drive it. I took the short from 1.3093. Once the market moved down about 15 pips I tightened up the stop to just above the highs and went to bed. Now I have moved the stop to break even and will see what today brings.

I doubt I will be adding to this position since its Friday and the chance for the stop hunt up to the 1.3120 level is there. However if I wasn’t short already or I get hit at break even before London, what I will be looking for is a hourly stop run to the highs to take the short. I will consider the short from the current Asian highs, but only if it runs down first and then retraces back into that Asian highs for the stop run.

The opportunity for a long position is still there since we are in a third level chop scenario but I will want to see a clear stop run to yesterdays lows to enter long.

Update: We had some good HSBC flash Manufacturing data from China this morning and I have been stopped out break even. Now I will be looking for the hourly close above yesterdays highs. If we get it we will most likely see the 1.3120 level and I will look for the trap short entry there. It will all depend on clear trapping patterns.

1 hour chart of the EUR/USD on Dec. 14, 2012

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The GBP/USD has a first push to the downside now. It had some help with a S&P downgrade of UK debt late yesterday and didn’t recover much at the end of the day. My bias is for the short today. What I will be looking for is the push down during Asia to test the lows from Wednesday at 1.6093 then pull back to the upside to test the Asian highs. Once it comes back into the Asian highs I will then look for trapping candle patterns there to take the short. If we don’t get them there the next level to look for them will be 1.6120 level.

Since we are in a first push situation there is a slight chance for a long position if there was a clear 1 hour stop run to yesterdays lows. The 1 hour 200EMA is there so we should expect some support at least temporarily.

1 hour chart of the GBP/USD on Dec. 14, 2012

Forex News Today

High impact news is light today but we do have the Flash Manufacturing and Services figures being released for France, Germany and the Euro Zone all together. The German Manufacturing numbers are the only high impact news for the London session and its expected to improve slightly.  Barring a large surprise to the upside getting it above 50 I doubt there will be much reaction. There is also the second day of the EU Economic Summit. Yesterday we did have a couple tape bombs with an agreement on Greece getting their next chunk of cash and what seemed to be a big hurdle passed with the banking supervision. However the market more or less shrugged those off with little reaction. Without something solid and believable coming from them today I doubt there will much reaction again.

The US has CPI data coming out today but with inflation at its lows without a large surprise to the upside we wont see much from it either. There is also Flash Manufacturing PMI. Its still well above 50 and last months release has been revised upward so we do have the chance of better than expected figures this time. If we get it I expect some risk appetite to come in and the Euro will catch a bid. The same applies to the Industrial Production figures later. They are expected to improve slightly and if the PMI figures miss to the upside then this probably will too.

Happy Trading


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