EUR/USD Creates Possible First Push – Market Analysis December 2nd 2015
EUR/USD Gives Potential First Push Up
The EUR/USD presented one decent opportunity today although the follow through was rather lack luster during our tradeable hours. During the NY Session we had a nice stop run of the upper manipulation point. Another reason I really liked this setup was that it was supported by the EUR/GBP which was at a major upper manipulation point as well. Technically this was a valid setup but I personally missed the trade. I guess after 6 years of running a live room I haven’t fully mastered the art of talking and trading at the same time. I started talking about a different subject and missed the quick pullback to the entry area. In the all previous month end trade analysis videos, when we are in a trade and a trade in the opposite direction sets up we flip positions. Using that same trade management rule set, this trade would have been closed for around +3 or +4 pips after the GBP/USD setup to go long. As I mentioned in the daily market preview video tonight, having a rule for every possible scenario written in your trade plan is critical. A trade plan allows you to be consistent and consistency is essential for anyone who wants to become a successful trader. If you were missing this as part of your trade plan it would be wise to determine how you are going to manage an existing trade when an opposing setup becomes valid.
For today I think you could make the argument for a first push to the upside which would limit us to only looking for the 2nd push up. Because the move was smaller than we want to see with a typical cycle, and given the fact that we have no lower manipulation from which to go long other than the overall lows, I will continue to keep the directional bias open. Keep in mind the possibility of a newly created lower level coming together as we have a great deal of open space in between the current price and the first lower level. Overall today’s levels are very solid and I would be happy to take a trade from any of the listed manipulation points should a valid stop run occur once they are reached.
Pound Surges Down After Testing Higher Prices
As I mentioned above, the Pound did provide a valid setup from a newly created level. In yesterday’s daily market preview video I drew out exactly what I would need to see happen to use the 1.5060-65 area as a first lower manipulation point. This was a level that was right on the verge of being valid but I decided to just use the deeper level instead. As I mentioned in the preview though, that level could become valid if we had a test of the level followed by a rejection that was at least 30% of the ADR. Once this bounce occurred the level officially became 1.5062 and the stop run later in the NY Session created a valid long.
This trade came together a little different for me. In the live trading room we were hyper focused on the EUR/USD setup and I was watching a few equity trades and never noticed the GBP/USD long until the 5th candle of the setup. Over the last 2 weeks I have made 2 major mental errors in my personal trading and the last one cost me quite a bit. Fortunately this one didn’t hurt me much but it has been a good reminder that I need to be more focused when trading. Because I have been doing the same thing for so long it is easy to become complacent and quite frankly that is what happened. Its a great lesson for those who think you can watch 10+ pairs. It is far better to focus on a few pairs vs focusing on a bunch and then missing a bunch of setups.
As far as today’s trading is concerned, I will continue to trade with an open directional bias. We have some great manipulation points from which I would love to take a stop run from. As always it is a simple matter of waiting for a valid stop run to occur from one of the listed manipulation points.
Forex News For December 2nd 2015
UK Construction PMI 4:30 AM Eastern: This month 58.5 is the expected number. While this news is a big mover on the initial spike, it has a much higher probability of reversing the initial move as compared to continuing on further.
US ADP Non-Farm Payroll 8:15 AM Eastern: Another piece of data that is capable of a 15+ pip spike. This month 190K is the expected number. Over the last 3 months there has been a bit of a muted move as compared to earlier releases. Don’t get complacent with the last 3 releases as one sizeable deviation is all it takes to get another huge spike.
US Fed Chair Yellen Speaks/Lies 12:25 PM Eastern: Based on the theme of the speech it would be wise to at least have access to it. If I was in a trade at the time of the speech I would probably feel out the volatility of the market. If spreads start widening and you get the typical bouncing back and forth 3-4 pips when she starts to talk then I would be closing out. Speeches outside of official policy meetings are always a discretionary call that takes some time to feel out. The best indicator is letting the market be the guide by watching your spread and seeing how stable price remains. If the price starts boucing back and forth with no real directional bias then that tells you an over reaction could very easily create a sizeable spike on any slightly bullish of bearish comment.