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EUR/USD, GBP/USD Forex Market Commentary October 29, 2012

October 29
01:20 2012

The price action on the EUR/USD last Friday confirms for me that the move up Thursday was a false push. Therefore we should be seeing the second push down today. I will be keeping in mind that these are extended levels. When we see these extended moves the probability is that we will continue with the technical trend.  Having seen the false push up shows that the smart money was pushing traders out of short positions as they load up on them and we have a good chance for another full 3 pushes down. Having seen one already.

What I will be looking for today is the clear manipulation move to the upside for the short. The best level to see that at will be the Asian highs that are now at 1.2943. If by chance we do see the Asian box end in that price range we have a better chance of seeing the manipulation at Fridays highs 10 pips higher at 1.2954. I will also be watching the red horizontal line at the lows Friday. This is a daily support level from October 15th that held nice Friday so we may well get a bounce there. If its a clear trap move taking a long there is a little more risky but would have a chance for a 40-50 pip retracement.

EUR/USD 1 hour chart from Oct. 29, 2012

What I see with the GBP/USD today is a deeper pullback after two pushes to the upside. This could be another one of those days we see the EUR/GBP take over and we see the Euro and the Cable run in opposite directions.  I should also point out that there is a small chance that we have seen 3 pushes up. As you can see on the chart these are intraday pushes. To be perfectly honest I like clarity to the pushes but we have to take this into consideration when we see the potential 3 pushes for 230 pips in this case. The clearer view to me is we have 2 long term pushes. My bias here is slightly to the move up. However, I will be keeping my mind open for a short. The best place for the short will be from Fridays highs where there is the nice topping formation at 1.6135 but if we do see the hourly close below Fridays lows I will start looking for the manipulation at the Asian highs at 1.6100

On days like these when we expect the EUR/USD and the GBP/USD to go in opposite directions we have to look at where the EUR /GBP is and what its doing. The way I see it is the daily close below the 4 hour 200ema is whats significant. As long as that hold price to the downside we should see the Euro drop and possibly the GBP/USD go up if it drops fast enough. We will have to wait and see.

1 hour chart of GBP/USD October 29.2012

Forex News Today

being Monday scheduled news releases are light with no high impact events scheduled. There are a couple medium impact releases of note starting with German CPI figures that will trickle in all day. Expected to be flat at 0.  If we see that Germany still has to start thinking about deflation they may loosen their grip on the ECB. I have my doubts but its possible since the ECBs  sole mandate is price stability and deflation is just as bad as high inflation.

The UK has Net Lending to Individuals m/m. If we do see a surprise to the upside then the upward GDP figures from last week have some backing and has the possibility to be GBP negative as the chance for more asset purchases goes down further.

The US has a couple medium impact events but my thoughts are they wont be as important as the NYSE being closed today for the hurricane they are expecting. It may not effect us as forex traders because the banks are still open but the correlation between stocks and currencies will probably fall apart some.

Happy Trading


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