Fx Daily Commentary EUR/USD, GBP/USD, EUR/JPY May 22, 2012
The EUR/USD did rather close to what I had expected in yesterdays May 21 commentary. It did manage to make a larger drop than I expected but none the less there was a nice entry at the 200ema on the 15 minute chart. It did give me a bit of a scare and just missed my 20 pip stop by .8 of a pip before the push up. I did double up on this position as it went against me as you can see in the screen shot below. Since it was getting late in the evening for me I closed one of those positions at +20 and waited for the other for a couple more hours and closed it +40 just before the small pullback and run up to the TP area at the 90 pip range tool. Still made the 60 pips so no worries.
As for today on the Euro we will be looking for the 3rd push to the upside. Which of course is the highest probability trade. The push yesterday was over 90 pips from the lows to the high and did have an hourly close above the push up during the Asian session. We are fighting the 1 hour 200ema at the moment and that should hold through Asia. During London I will be looking for the trap move to the downside and go long from there. I also want to mention that this does go against my fundamental bias so I will be trying to keep an open mind for the short but the long will be what I expect from the Smart Money.
The GBP/USD is still in the same position as yesterday and traded in a small 45+ pip range all day. The way I see this now is they were holding this pair down while the moved the EUR/GBP to the upside along with the EUR/GBP so has the possibility for the larger move up today as it plays catch up. The wild card here too is fundamentals but I am having to eat those with a grain of salt as I trade against them. Today will be a day I either look for the trap at the bottom of that range from yesterday around the 1.5780 level. Or the break out of the highs during Asia and retest with the trap. I will be happier taking the long from the lows but what we want and what we get are often 2 different things in trading.
The EUR/JPY did provide an aggressive entry with a 1hr stop run to the highs from Friday but one would have had to be on top of their game to get the best entry. It also had a subdued move since the USD/JPY traded rather flat yesterday. This tells me that there is not risk driving these markets with the lack of movement on the UJ. Even with equities popping to the upside I am still keeping in mind the fundies and potential for the move down to continue later. At this point I do expect more of the short squeeze before that happens as for the most part I am thinking this is the plunge protection team at work.
I still consider this move yesterday as the 2nd push up long term and will expect a third but if we look at the intraday pushes from the lows I see a clear three and will be keeping an open mind for sure. We are definitely finding support at the break out area of 101.45 so a trap move there during London will be attractive for the long.
Forex News Today
Almost all the high impact news comes from the UK today starting with CPI, Public Sector Net Borrowing, RPI and the BOE Inflation Letter. The Inflation figures are expected to drop slightly and there hasnt been much to make me think they will surprise. The BOE inflation letter provided a nice move last month so this will be the release I keep the closest eye on and will look for the GBP/USD to set up clearly in the hour or so before the release.
Later in the day FOMC Member Lockhart Speaks and the high impact event for the US is existing home sales. This is expected to rise decently and if it can manage a surprise to the upside it will give more fuel to the recovery fire in the US and we will see some risk come back. The potential for the decoupling theory to come back is there also so keep an eye on your charts guys.
Lets take a break
I figured it was time for a break on all the negativity and found this little entertaining video for you guys. The truth of it is sort of sad since Wall Street really sees the investing public as muppets but I got a little chuckle from this SNL skit. Enjoy
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