EUR/USD, GBP/USD Analysis January 14, 2013
With the 330 pip move on the EUR/USD over 2 days last week it throws us off on the levels we are in so today I will be treating this as a 3rd level chop with no clear bias. Having said that considering the gap up today it would seem like the bullish move will continue. Its approaching a daily resistance level at 1.3380 so we will have to see how it reacts there during the Asian session. If we do get the hourly close above there it will increase the chance of the move up significant enough that I will be looking for the long for the most part. If we see the hourly stop run during Asia I will still hold an open mind on direction due to the expectation that Asia will not want to create the breakout as they generally wait for London or NY to do so.
In the first scenario is a close above the 1.3380 level during London. If that does happen I will be looking to the Asia lows for the manipulation to take the long. The last place I will be looking for a long would be the 1.3321 level. If we see an hourly close below that level my bias would shift for the short and I would expect a run to 1.3282. Any shorts will be at an hourly stop run to the 1.3380 level during the London session.
Update: We are seeing some clear momentum above the daily resistance level and if it can manage a close above here and stay above before the London open the Friday highs come into play for the long during the London session. Keep in mind they may want to close that gap, so it will have to show me more than just one set of candle patterns to be convinced of any long.
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The case with the GBP/USD is not much different but is showing that the GBP is the weaker of the currencies between the GBP and Euro. It is entirely plausible that we have a first push down considering the 89 pip move Friday and a clear topping formation. However the choppy price action leaves that up for debate. If the USD weakness does continue this will be a false push down and will test the highs again today. The best place to be looking for the long will be at the previous support at the hourly 200EMA of around the 1.6100 level but keep in mind price has already shown it can reach 1.6087 so the trap will need to be clear at the hourly 200. As for any shorts there really isn’t a clear level to take one from except the Thursday highs of 1.6178. The chance of it getting there is not that great unless we see it before the NY reversal, so if I do miss the long opportunity I will watch that level during the US session for clear signs the reversal is coming.
Forex News Today
Scheduled news is light today with only one medium impact releases from the Euro Zone. The EZ Industrial production is expected to creep into positive territory but at 0.1% is easily within the margin of error so it will need a decent surprise upward to gain any thoughts that things are improving in Europe like they all keep trying to tell us.
Otherwise there are some French bond auctions going on but will most likely be a non event since the Spanish and Italian ones last week went well.
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