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EUR/USD & GBP/USD Stay In Range As Stock Tumble – September 1st 2015

September 01
04:04 2015

As I talked about a few times last week, US equities had a key retracement area that has since been hit. This retracement area has historically been 50-70% of the first major sell off. If the market surges through this area as we had happen in the October crash of 2014 then further upside is very likely. If however the market pulls back into this area and then begins to sell off and sets new lows, further downside becomes all but certain. As of right now we have seen this retracement on the S&P 500 and depending on where you start the top of the drop the Dow has reached this level as well. What happens next is really the key. Right now S&P futures are beginning to sell off again and only tomorrow will tell whether the early momentum continues. For more on the subject you can go back to the August 24th forex commentary or the August 27th market analysis.

S&P 500 Chart - September 1st 2015

EUR/USD Starts Week Bullish

The Euro shows continued buying in the COT data last week which makes me wonder whether or not last weeks selloff in the EUR/USD will continue. To start this week the Euro is within a nice range which gives us solid manipulation points from which to trade. In last weeks commentary I talked about how the EUR/USD had slipped below the 200 EMA on the hourly and how a retest back into it would represent a nice continuation setup. Its important to note that the 200 EMA is not the reason that level was a manipulation point for Friday, but it did support the belief in that point. Overall the Euro provided a perfect confirmation entry short from that point for a nice full take profit trade. For any members make sure to check out today’s video preview for a full break down.

Today I remain open on direction for the Euro as I do the majority of the time. Like always, what happens when we come into the pre-selected manipulation points will be the key.

EUR/USD Chart - September 1st 2015

Daily Support Holding For GBP/USD

As of right now the GBP/USD has come into and is currently holding on daily support. Much like the Euro, the Pound continues to show buying pressure in some parts of the COT data but the price action is saying something completely different. One major reason for that is COT data only goes up until the Tuesday before the release. If you look at the Pound most of the downward movement in the chart came in on Wednesday and after and therefore may not be seen until next week. 

I do favor a push down but I would take a long from the one lower manipulation point listed as it is such a widely viewed level. There will be a great deal of liquidity around that point from all types of traders and therefore I would take any valid stop run long. I had one additional upper manipulation point on the Pound but it was broken during the current Asian session and thus it was removed which leaves us with one valid point that is within the current average daily range.

GBP/USD Chart - September 1st 2015

Forex News For September 1st 2015

UK PMI Manufacturing M/M 4:30 AM Eastern: This is another piece of UK data that you want to be aware of. It is capable of creating a sizeable spike and with a large enough deviation from the expected number it can change the short term trend as well. This month 52 is the expected number and a deviation of .5 +/- will create a sizeable move.

US ISM Manufacturing PMI 10:00 AM Eastern: ISM has been rather strange for the last two months. As with most US data ISM had come back into focus and was getting more and more reaction until the last 2 months. For the last two month the market has been giving very little reaction at all. Still I would be cautious around this news as it has been capable of creating a 15 pip spike within the last 6 months worth of releases. This month 52.8 is the expected number.


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