EUR/USD, GBP/USD May 30, 2013 Analysis
The EUR/USD went and made the reversal yesterday so now I wont have a bias and just look for the price action to tell me what they are doing. It did give the hourly stop run below the Asian lows but it was small and didn’t give a pullback for the entry. Not that I would have taken it since I was expecting the GBP/USD to make the third push and drag the Euro with it. If it did it to the lows at 1.2820 I would have been all over it but no dice. I did see a member took the long and made some nice pips on it which makes me think I should be letting aggressive Chad out of the box a bit more these days. Good job Freddy. I hope you got the 100+ pips on the table.
Today I will have a slight bias for the long but mostly be just looking at the price action at the significant levels I have marked. I do like the 1.2976 level for the short due to it being yesterdays highs and the hourly 200 EMA that has been getting some good respect lately. I will be watching that hourly close there also. If it gets a significant close above I will look for the long. Otherwise the possibility for a long at 1.2926 or 1.2917 looks good for potential manipulation also.
The GBP/USD gave the stop run to the 15012 level I mentioned in yesterdays commentary. However the time of day it happened wasn’t convincing being before the Frankfurt open so I stuck with my bias and took the short on the holding pattern at 1.5060. It moved 30+ pips in my direction before promptly stopping me out at break even on the push up. Since there was no news pushing price yesterday the only conclusion is these moves were based on the month end flows and its best to keep an open mind today as these both could reverse or keep the push up going.
The level that has the highest probability for the long is between 1.5107 and 1.5000. The options for the short are a little les clear with three possibilities. The 1.5135 has potential but the proximity to price concerns me while yesterdays highs is a little better at 1.5144. The overall highs just behind at 1.5155 would be best but they may not let it get there so I will be looking to see some clear manipulation patterns. I will also say that as long as the Asian session pushes price down before we get to the London open the lower levels for the short have a better chance.
Forex News Today
The calendar looks pretty busy today but there are only a few high impact events worth mentioning. They start with a 5 and 10yr bond action from Italy. Of course its the 10yr to watch but at this point I think its a toss up as to the outcome of this. The higher probability is business as usual and it goes well for no other reason that the ECB will take literally any junk collateral from the banks and give loans to buy more junk. And the circle jerk goes on. Then there is the off chance these banks are out of junk to get loans on and they cant buy more junk. I think the former has a better chance since there seems to be an unlimited supply of junk out there.
The UK is quiet while the US has Unemployment Claims and GDP data coming out at the same time so which ever misses bigger will get the most attention. however watch out for a positive miss on one and negative miss on the other. If this happens the market will get jumpy for awhile as they make up their minds on what Ben will most likely do.
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More Bizarro World
In light of the borrowing with junk to buy more junk theme I leave you with a excerpt from my weekly edition of Things That Make You Go Hmmm… by Grant Williams. The same guy who did the Do The Math presentation I posted Monday. Good stuff and if you want to read the whole TTMGH pdf you can get it here.
In case you can’t quite read the text, the exchange between the salesman and his extremely eager crowd of buyers goes as follows:
The bond salesman holds a bunch of bonds in his hands and implores the eager crowd to buy them, promising listeners that these particular bonds are
guaranteed to lose money for anybody who purchases them.
Naturally, this being Bizarro World, the response from the crowd is somewhat contrary to that which would be expected on Earth:
As farcical as Bizarro World is meant to be and as much as everything that happens in it is supposed to be the absolute antithesis of what would happen in the ordinary world in which we are all supposed to function, the very scene depicted in the panel is being acted out right now here in the “real world”.
As I know many of you would agree it just don’t get any more BIZARRO than what we have in the markets today.
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