December 2nd 2013 EUR/USD, GBP/USD Analysis
As expected the price action on the EUR/USD at the end of last week was slow due to the Thanksgiving holiday. It was actually still more lively than what seems to be normal a few years back. Of course the reason is the change in the markets over the last few years in that the currency markets don’t depend on which economy is stronger. Now it is solely running on which central bank is going to print next since pretty much all western economies are in the proverbial crapper these days no matter what the main stream media t1ies to tell us. I know members who have been around awhile know this and so does all of the western world unemployed. The question is when it will start to show in the equities markets. The answer to that when the big boys start booking profits and it creates a running for the door effect. Having said that there will be the typical propping up again as they tried to do in the 1930s but the fact is their has been so much propping already that it has little chance of doing much good. I should also say that the propping they are doing could easily last several years. We only have to look at Japan for a good example. I wont go into the many differences between Japan and the west but it is a very good example of the lengths the big boys will go to keep the status quo alive and as with all things that get propped up with lighter and lighter mate1ials to ever higher highs. The eventual collapse is all that much more spectacular when the fall finally comes. On to the charts.
Right now the best way to trade the Euro is from the extremes with an open bias on direction. I can find the three pushes over the last five days of price action but if I slide the chart a bit I see that we are in extended pushes also and the way they made those pushes spanning from one day to the next is not typical but does happen. Having said that the reversal I see from Friday may be all we get before it breaks upward again. The fact is the USD is seeing significant weakness right now due to Janet Yellen coming into the Fed next year. Therefore I will be open for the long around 1.3580 however if we get the run to test the highs and conviction close above Fridays highs I will be bias long and look to the 1.3600 or just below at the support fo1ming now. Othe1wise if we see the range hold here and then get the stop run to the highs I will be willing to short from there with the right price action.
The GBP/USD is showing even more strength against the USD this morning coming close to a significant daily level at 1.6450 and a 70 pip run while the EUR/GBP dropped nicely. There was some news this morning that the Royal Mint in the UK plans to start issuing gold backed physical Bitcoins which would explain the move. However how this would fit into the digital Bitcoin world seems difficult unless pai1 of the plan would be to see bitcoin match the price of gold. It did just that over the weekend but we all know that gold is way undervalued today so even though bitcoin took a nasty hit dropping over $400, it has recovered nicely and as the world catches on they both should rise exponentially. It seems that the digital currency will be here to stay as it gets more popular and we may actually see a forced gold standard by default in the near future. Nearer than I thought possible actually. What will be the lynch pin is when the US gets weak enough that they cant manipulate gold anymore and if other nations start doing the same as the UK that time is probably sooner than we think. That will be interesting to see.
Now that we have the positive view which I would really like to believe. That is probably not really the case since the UK is a coconspirator in manipulating gold along with the US and is likely doing what is described in this Zero Hedge a11icle. Im kind of thinking this will be a “when pigs fly” type of event since the people who use bitcoin will never buy into the turning it into fiat currency.
We have the same situation on the chart as with the EU on the GU today. We have extended pushes that could turn at any time and heading into some significant daily levels on this pair in particular. With the USD weakness I will prefer the long here today but keeping my mind open on direction until I see more information. The best place for a long is the 1.6380 area at Fridays highs right now but it may not get that low if there is the conviction. I do think they will try and flush out some weak holders but may only get to the 1.6400 psych level. In order to take the long there I want to see price leave the Asian box closer to its highs. Otherwise the will most likely go all the way to 1.6380. I will be open for the short at the highs or even around 1.6450. There will have to be a lot of trapping going on there and I will need a good entry though.
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Forex News Today
The calendar starts off with Manufacturing PMI figures from Italy, France, Germany and the Euro Zone with expectations to be flat across the board except Italy with a slight improvement. As usual the German figures will be the big one but will take a big miss to create any sustained move. I have my doubts that will happen but will be watching at that time of day to see. The UK has their Manufacturing PMI data also expected flat so it will take the same sort of surprise to move on the release but will most likely be used to manipulate on a smaller miss as with the European release. The US has a Bernanke speech and ISM Manufacturing PMI data later. If the speech lasts to within an hour or less of the PMI data then PMI will be ignored barring a large miss. If it does miss big and correlates to something Bernanke says then we may see a move on it but I have my doubts.
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