Forex Daily EUR/USD, GBP/USD Commentary September 19, 2012
The EUR/USD has the first push down for the reversal as expected once it gave the 1 hour close below the support level at Mondays lows. We were looking for the potential long set up in our live forex training room until this had happened. It was definitely a day to test our patients since we did have some trapping formation to the lows of the Asian session. However during the pullback for the potential entry long the momentum made me concerned and I waited. Sure enough 15 minutes later we had the hourly close below the support and that changed my bias to short as I mentioned in the Sept 18 forex commentary. The entry was tricky at best though. An aggressive short on the pullback to 1.3096 was stretching it for me but once the engulfing candle pattern was finished the more conservative entry presented its self with a pullback to the 15 minute 200ema. Anybody who took this short had a long wait ahead for a 50 pip profit but was a nice trade in the end.
Today the probability is we will see the continuation with a chance of a pullback to the breakout level of Mondays lows as well. The first place to be looking for the manipulation will be the 15min 200ema at 1.3066 but the posibility for the push to the 1.3080 level is there.
The GBP/USD is exhibiting signs of that last push to the upside indeed being a false push as we are now seeing a clearer topping formation and through out all of yesterdays price action there was one close above Fridays highs only to be rejected a few times after. To finish it off we have the close at the low end of the daily range showing more signs of weakness. At this point the Euro is definitely showing that it is the weaker currency and the USD is not really showing that much strength but either pair should be a good trade today. having said that I prefer the Euro due to its overall weakness but I dont think it will be long until the GBP plays a little catch up.
Today I will be looking to see the hourly close below yesterdays lows of 1.6220 for the clear bearish signal. however an aggressive entry short with a clear trap move at the resistance of Fridays highs is not out of the question.
Forex News Today
There is not many scheduled releases today, but a few of note. Starting with the BOE MPC Meeting Minutes. The market will be looking for more signs of Asset purchases or possible tightening but I have my doubts on that front. The UK has been tolerating the higher inflation rates and I dont see that changing unless it jumps substantially.
Later in the day the US has Building Permits, Housing Starts and Existing Home Sales. With no real big change expected in any of these I dont expect too much movement from them. Its going to take a month or more for the Feds MBS purchases to trickle into anything substantial for the data if it happens at all. My guess is that the banks just absorb the money like they have every other time the Fed had printed and it never reaches the street like its intended. Go figure.
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