EUR/USD, GBP/USD Analysis April 24, 2013
The EUR/USD can be looked at a couple different ways today. It did get the push down expected in yesterdays commentary after testing the right side of the head and shoulder pattern on the French news. I have to say the manipulation was comical during the live room yesterday. The reason is French news never makes that sort of reaction running almost 40 pips. What I said in the room was that it was one of two things. They were anticipating good German news or they were running it up taking stops because they knew the German news would be bad. It turned out to be the latter as the German PMI figures popped below the 50 expansion level and the EU dropped like a stone. Of course it wasn’t tradable but it was entertaining to see how they use the news to manipulate.
As we can see on the chart below I can find three intraday pushes to the downside and a slight possibility for a reversal. The other way to view this is we finally have a first long term push out of the chop and should see the second today. The good thing is there was a short reversal during the US session yesterday and it eventually moved back lower to close on the day so all things considered the more probable scenario is we have the first long term push to the downside. Therefore I will have a small bias for the short. I will still be open for a potential long since this is a first push but I will want a clear stop run to the lows yesterday in order to enter a long.
The levels I will be looking to short from will be anywhere between the 1.3014and 1.3029. The reason is the lower level is a break out level that held during the US session yesterday but the reversal did get as high as the 4 hour 200EMA so we could see the manipulation anywhere in that area. It also seem like the psych 1.3000 level is holding price down during the Asian session but I will need to see a very clear set up since it is a higher risk level being in such close proximity to current price.
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The GBP/USD has now also seen a head and shoulder pattern but we don’t have any clear direction as of yet. The push down during the end of the US session is encouraging but I will be keeping my options open considering an entry on this pair. I will say I prefer the short but that is not enough to build a trade from.
The levels I will be looking to short are the 4 hour 200 EMA at 1.5260 or the 73 level just above at the hourly 200. Otherwise there are really no clear levels that look all that great considering the price action alone. In reality the 1.5285 looks the best. The potential for a long is pretty much the same with the psych 1.5200 level at the lows.
Forex News Today
The economic calendar starts off with German IFO Business Climate expected to drop slightly. However considering the PMI figures yesterday this has a higher chance to miss to the downside rather than surprise upward. They also have their Business Assessment and Expectations at the same time so I will be watching for conflicting data and if we get some of that the reaction will be muted.
The US has Durable Goods Orders with expectations for the core figures to slightly improve while the all inclusive figures to drop significantly. With a large miss in the core data we will see some volatility but how long it lasts is questionable.
Later in the day BoC Gov Carney Speaks. The only reason I mention this is the last time he put his foot in his mouth talking about his new job at the BOE coming up he sent the GBP markets on a frenzy. I doubt he will do it again but there is that chance so be careful if you are in a trade at that time.
If you haven’t read Sterlings latest article on longer term trading the manipulation you can check it out at the link below. A must read if you haven’t got the time to watch the charts all day.
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