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FX EUR/USD, GBP/USD Daily Analysis December 13, 2012

December 13
02:57 2012

Thanks to Bernanke who went all in (yet again) we have a third push on the EUR/USD. Thanks Ben I knew we could depend on you. 🙂 Now he has doubled down again. Actually more than doubling the initial $40 billion in monthly purchases to $85 billion. Lets see how long this lasts. My guess is a few days maybe a week. However when we throw the holiday season in there it could be longer.

I didn’t take a trade yesterday. The manipulation wasn’t clear enough for me personally and they were trading off the trap during the Asian session. As I said in Wednesdays commentary I expected a small push down below the Asian box at its lows, and that push never came. I did see that there were some members in the skype group that took the entry at 1.3000. Nice pips guys but I should warn you that sort of aggressive entry has its down side as well. For me its better to miss those than build bad habits. 

I also had an email conversation with a non member asking how to trade the Fed news. At that point price had already moved 50 pips to the upside and went into the typical chop before the release. My advice was unless he had a good grip on the news, what it means, and likely market reaction, then don’t trade it. There was still the chance Bernanke would disappoint even though market expectations were for more QE. Also market reaction would be determined by the size of the addition rather than just the addition itself. Ben went in big and we got the nice spike up.

Today my bias is for the reversal in the Euro. It has tested a daily high at 1.3088 and showed some rejection, but there is also a more significant daily high just behind that at 1.3125 and they may want to try and get those stops since we already have risk appetite in the market after Ben more than doubled down on QE. If I can get a clear 1 hour stop run at yesterdays highs I will take the short on a nice pullback. The only way I would consider a lower entry is if we see the stop run to the Asian lows first which would trap the breakout traders. If this happens then I will consider the Asian highs as a possible place to short if we get a clear trapping pattern.

With the Bernanke news there is a chance we could see an extended push here but I do have my doubts. The half life of these events gets shorter every time he goes all in…again and again. If anyone is long today still I would recommend considering an exit before 1.3125.

1 hour chart of the EUR/USD on Dec. 13, 2012

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The GBP/USD also made the third push up with a bit of help from Ben. I will be looking for the reversal in the Pound also. We do have a retracement down already, and the Pound is potential going to stay in this third push chop situation. Because of that I will also be considering a long from the lows during yesterday’s US session at 1.6112 if we get a stop run of that point. Again with a long I won’t be holding for a longer run and would much rather prefer the short from the highs. So if I miss a long opportunity I will be waiting for yesterdays highs for the potential short.

1 hour chart of the GBP/USD on Dec. 13, 2012

Forex News Today

Scheduled releases for the Euro today start with the ECB Monthly Bulletin. This will most likely reflect the statement and press conference from last week but will have some impact if we see they were discussing events that could change their current policy. However I expect it will be short lived if the Euro Group Meetings or the EU Economic Summit drops any tape bombs. What will be key is a decision on Greece getting its next pile of cash or Spain asking for the bailout. Same as usual. 🙂

Later the US has Core Retail Sales, PPI, Retail Sales and Unemployment Claims all released at the same time. Considering what is expected from all these I think a big miss on Unemployment will have the biggest reaction. Since Bernanke has already doubled up the reaction could be muted though. Its hard to say. If the surprise is to the downside for Unemployment Claims we will probably see some USD strength with thoughts the addition of more QE may get pulled.

I also want to mention the SNB Monetary Policy Assessment and Press Conference. If they do signal any change in their policy it will have a large affect on the EUR/CHF which will in turn push the EUR/USD around. Its a small chance but its there.

Happy trading


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