EUR/USD, GBP/USD Commentary February 20, 2013
We have gotten a first push to the upside on the EUR/USD yesterday giving us something more clear on direction now. Its also pushing up here in the early Asian session giving it a more solid footing. Since it did have the hourly close above Mondays highs it was a little clearer but what makes it more solid is if we get this candle to close above Fridays highs last week. Still have 27 minutes to go so we will have to wait and see. Looks good so far though.
My bias for this pair will be for the long position. Assuming the Asian session finds a high here we already have a 37 pip Asian range so we will most likely have to look for the manipulation inside of it depending on where price leaves the Asian box. If its around the highs then the first level to look at will be the hourly 200 EMA that coincides with the daily highs yesterday at 1.3393. If we see price at the Asian session lows during the beginning of London there is a good chance they will test the 1.3380 level and we will get the manipulation there. Having said that the most likely level is the hourly 200.
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Once again we have the GBP/USD running opposite the direction of the EUR/USD and have a clear push to the downside with a clear break and daily close below the daily support level of 1.5455. I am currently holding a short position from 1.5490 watching to see if they are going to try and test that break out level today. What I am looking for is the hourly close above the lows Monday at 1.5436 and I will close it with 50 pips or so. Otherwise it has a good chance of testing the 1.5400 level and possibly going as low as 1.5319 which is the next significant daily low.
My bias is short this pair today but considering the price action on the Euro it will need more help from the EUR/GBP which is coming up on some daily highs and may not have the conviction to break through. If it does manage to trick me into closing this trade the level I will be looking for the manipulation to short from will be at 1.5455. If this level manages to hold and price leaves the Asian box at its lows then the Asian high becomes a level for the potential manipulation also.
These are tricky times to be trading these pairs but we have to deal with what the market does so be careful out there today.
Forex News Today
The scheduled releases today start off with German CPI figures that will trickle out all day. I have my doubts this will create much volatility since they are expected to be well below the 2% level. However any surprise showing they are getting much closer to it and it may be Euro positive at least for awhile. The reason is when inflation gets high in Germany they will be more resistant to the ECB unconventional measures.
The UK has the BOE meeting minutes which should bode well for my GBP/USD short. Considering the inflation letter and Gov King saying they have more room for asset purchases there is a good chance for this to be GBP negative. Remember Carney dont take the helm for another 4 months so until then we have King running where the GBP goes.
The US has a slew of medium impact events with Building Permits, Housing Starts and PPI figures buy my thoughts are these will take a back seat to the FOMC Meeting minutes late in the day barring a large miss by any of those. If I am stil short I will be closing my GBP/USD trade before I go to bed just to be safe.
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