Euro Approaching Major Support – November 4th 2015 Forex Commentary
‘Momo Traders’ Book
Before we get into today’s market analysis I have two different things to share. First, about a week ago I recommend a book called Momo Traders. The book interviews 10 top traders with hugely successful track records. I did a blog post about the book and you can find that at the link below. I also have a 20% discount coupon code for DTFL members and readers of the blog which you will see in the video I did. For anyone that is wonder…I have no monetary association to the book and I make no money from the sale of it.
The second thing I wanted to mention before getting into today’s commentary was the month end total for October. For the last 6 months I have been doing a month end review of every valid trade setup on the EUR/USD and GBP/USD based off of the levels I cover each night in the members daily market preview video. If you have not seen the last 5 videos then click on the ‘Recent Trades‘ tab above. The last 5 posts will be the monthly analysis from May, June, July, August, and September. I should have the month end for October posted by tomorrow this time as well. Based on 2% risk per trade, October closed out with a +15.4% gain on just the EUR/USD and GBP/USD.
EUR/USD Gives First Push Down
Normally the situation in the Euro would be really simple. I would call today a first push to the downside and I would only look for the second push to the downside today. The only trouble with that is the major overall low we are going to run into shortly. As a result, I will list the upper manipulation point from which I would look to take the second push down. I will also have the overall lows as a lower manipulation point from which I would consider a day trade long. In the even the lower level breaks I would also consider a day trade setup short off the backside of that level as that is a clear breakout point with nothing left to stop the price.
Yes that technically means I’m keeping directional bias open. Level selection trumps cycle in order of importance. As always, price touching a level is not a reason to enter. A valid trade setup always requires a stop run and confirmation entry of the level to trigger a valid trade setup.
Two Strong GBP/USD Reversals
Yesterday we had a very strong rejection from the highs which resulted in me having a much stronger bias to the downside. Although this move did prove to be the directional bias for the early part of the day, later price action was quite bullish. Today’s move is essentially a large stop run type move. When the market makes a directional push that is immediately retraced you will more often than not see that continue further into the next day. That is why I do favor the push up today even though we do technically have a valid market cycle. The bigger issue with the GBP/USD is the listed manipulation points. With the size of the moves, most of our listed levels are quite a distance from the current price which lowers the probability of seeing a trade setup.
Although I do favor the push up, I will still be open to either direction based off of any valid stop run of the listed manipulation points. If you notice in the chart below I have two different scenarios draw from the middle manipulation point. Option one is a simple stop run of the level from which we would go short. Option number two would require the price to first break above the manipulation point and then come into the ‘backside’ of this level. This is what we term, day trading the backside of manipulation points. One thing I talked about in the daily market preview video for members was the fact that any trade off this level is higher risk as compared to the other levels.
Forex News For November 4th 2015
Draghi Speaking 3:00 AM Eastern: To my knowledge, Draghi will be speaking on banking supervision so I don’t expect a great deal of volatility in the market.
UK Services PMI 4:30 AM Eastern: This month 54.5 is the expected number. Like most of the UK Data was have had this week, Services PMI is not a very strong indicator when it comes to creating trending price action. More often than not the market does not go too far beyond the initial spike before reversing. That is why I say this series of UK data this week is better suited for trading against the actual release.
US ADP Non-Farm Employement Change 8:15 AM Eastern: This month 180K is the expected number. US ADP is normally a big dud, until its not. The one time its not a dud is the one time you don’t want to be the person who carried into the news release only to see a unexpected 40 pip spike against you. With a large deviation this can create a 50+ pip spike. Like most other non major news the probability of this shifting short term market trend is 50/50 at best.
Janet ‘piglet’ Yellen to Testify 10:00 AM Eastern: Yellen testifies about housing regulation. Things like this are literally like reality tv shows. I tend to think Jersey Shore is more reality this Yellen talking about hosing regulation. Right now the Fed is keeping rates at zero causing another housing bubble and they are going to talk about regulation. The Fed is a PRIVATE banking cartel that rigs economy’s to favor the .0001% and she is talking about regulation??? Amazing to say the least.
US ISM Non Manufacturing 10:00 AM Eastern: Although unlikely to create a 15+ pip spike this is one to at least keep on the radar. If I was going to hold a trade into and of the 3 actual “data” releases today this would be the one. You can be more aggressive with taking trades ahead of this news as even with a little bit of clearance you would probably be fine holding into the release. If I was at break even or negative I would not carry into the release as the increase in spread along with even a modest spike would be enough to stop a short term day trade out. 56.5 is the expected monthly release.
Want to learn the bank trading strategy, join our weekly live training room, talk to members in our forum, and have access to lifetime support? Learn more here