EUR/USD Closes Below November Lows Dec. 4, 2013
Euro Weak Ahead of ECB Press Conference
All eyes will be watching Super Mario today, looking to see if he gets the go ahead for his main QE program and starts buying sovereign bonds from the weaker European countries. At this point I am on the fence thinking its too risky to say where the higher probability lies. My gut tells me they are going to go full retard but there is also the weak EUR/USD getting real close to testing a few monthly low levels not seen since the height of the crisis when the Euro Zone was fixing to collapse. Im thinking the Euro may be weak enough for them right now. If those levels are breached and the EUR/USD approaches parity there should be even more concerns of the European Union falling apart. Im sure at the very least those levels will be defended again but this QE thing has potential to push the Euro beyond the point of no return. There is no doubt in my mind they will be going full bore to hold it together but one has to keep in mind that they have already overthrown a few elected governments that expressed a desire to potentially leave the Euro and countries around the world have already proven that QE does not work so where does it end? Somewhere unpleasant IMHO. Interesting days ahead.
EUR/USD Second Push Down
The EUR/USD making the push down along with the significant daily close below November lows signals more weakness ahead but will depend on whether of not Draghi goes full retard today. I will be bias for the short looking to see them test up to 1.2334 before pushing off, hopefully starting the push ahead of the ECB announcement so I can get my stop to break even before the speech. There is a smaller chance they only go to 1.2321 but with that price being so close to the next level it would be best to see Asia test there this morning so it has more confluence. Having said that if they do want to run stops first they will pop above 1.2343.
GBP/USD Holds First Push Lows
The weakness in the Euro causing a heavy dip on the EUR/GBP has helped keep the GBP/USD from breaking to the downside leaving direction open for this pair. The potential for this happening again today if the ECB goes full QE mode is rather high since the likelihood of the BOE doing anything drastic is very low. Therefore in order to trade this pair I will wait for yesterdays highs or lows to be tested before looking for an entry. The proximity to 1.5715 for the short seems better but with the daily levels just above I will be cautious and want a great entry.
EUR/JPY Pushes Down Still Holding Range
The Yen weakness still isnt trumping Euro weakness at this point. All but the GU seems to be pushing the USD strength at the moment keeping the EUR/JPY contained for now anyway. Therefore the best trades on this pair will be at the extremes of the range until we get a decent break and preferably a daily close beyond the range. However if Draghi gets his way then the EUR/JPY will break to the downside as long as the USD/JPY dont hold it up like it has been so far. Yesterdays highs are a valid but more risky level to short so if there is a set up there today I will be cautious as with the GU.
Forex News Today
News releases will be dominated by what Super Mario does at the ECB Meeting announcement. I have my doubts there will be much movement ahead of the NY open today unless of course the BOE surprises (doubtful) or the UK housing data misses large enough to get them stirring the GBP (again doubtful) If I cant get in a good entry during the London session then the best action will be to stay flat for the day and watch the fireworks after the announcement. Having said that the fence seems to be loaded on both sides. Some are expecting the full retard while others think Draghi will disappoint and hold off on a major QE program. Personally I dont even want to guess.
MY APOLOGIES FOR THE BROKEN VIDEO OF INSIDE JOB IN THE COMMENTARY. I DIDNT THINK I WAS COPY WRITE INFRINGING WITH AN ITALIAN VERSION ALREADY ON YOUTUBE. HOWEVER YOU CAN STILL WATCH IT AT THIS LINK. STILL A MUST SEE!
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