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FX EUR/USD, GBP/USD Daily Analysis December 7, 2012

December 07
02:38 2012

If that’s not a clean second push on the EUR/USD then I don’t know what is. As we were watching the pair during the live room session yesterday I still had the bias for the down move since we finished the first push down during the Asian session. This was also in the update in the Dec. 6 commentary. What really gets me in the craw is I was short from 1.3080 during the London session but got whipped out at break even just before the news came out and the drop commenced. I was actually talking to a member over skype as I was getting stopped out and he asked if I was considering another entry. If it was any other day I would have but on days with big news like the ECB press conference it is just too risky and to think that I have enough information to predict that Super Mario wouldn’t even do his typical Euro pump is just silly the way I see it. Therefore I decided to just watch it run off with out me. However I do still find comfort in knowing I had it right all along with them trapping break out traders who were shorting the Asian lows only to then stop them out as they ran it back up and induced long breakout traders at the Asian highs before the true move in the direction we were expecting.

Today I will be looking for the third push down, however where it has potential to start from is going to be difficult to determine. With that far of a run during one day I would expect a deeper pullback to the upside to try and push some weak holders out of the market before the next push down. Having said that we may not see it with the bearish tone we have after Draghi’s speech this morning. It is early in the Asian session so we will have to wait and see what sort of price action we get in order to make a determination of the most likely manipulation points. Right now I would prefer a pullback to the hourly 200EMA and see the manipulation there. Its falling right around the 1.3000 psyche level so that would be a good place for them to test before the move down. What bothers me a little is that is right smack in the middle of an inefficient move on the way down, so if it can reach there it has potential to get all the way to 1.3020 which would close that move and test the break out level. The main thing I will be looking for is clear trapping patterns at those levels. We are getting some of the candle patterns we look for during the Asian session showing it does have potential to start the pullback here but we will have to wait and see if they hold. If we do not see the pullback first it will be a no trade situation.

1 hour chart of the EUR/USD on Dce. 7, 2012

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The GBP/USD has had its first clear push to the downside and I will be looking to see the second today. Right now the hourly 200EMA is holding it down nicely but I expect they will try and use that as a manipulation level during London if it can hold during the rest of Asia. If it does break to the upside then the best level to look for the trap will be the break out level of  1.6080, which is also where the 15 minute 200EMA is sitting. Since this is the first push those members who like the aggressive trades may have the opportunity to take the long position with a trap move to the lows but I wouldn’t recommend holding for more than the 40-50 pips. If this pair can’t make the break above the hourly 200 and makes a push lower during the Asian session then that hourly 200EMA will be the first place I will look for the trap. I will want some clear trapping patterns there, especially since I will see that as a little more aggressive entry without the deeper pullback first.

1 hour chart of the GBP/USD on Dec. 7, 2012

Forex News Today

Scheduled releases start off with UK Manufacturing Production and Consumer Inflation Expectations. With it being Non Farm Friday I doubt these will get mush reaction. The Mfg Production figures do have potential for some manipulation with a big miss but that is all I expect.

The Euro Zone has a ECB President Draghi speech. He may try and do his Euro pump here today since it was thwarted during his press conference yesterday, but I doubt it will have much effect overall. Without an announcement from Spain taking the bail out (fat chance) this will probably come and go with no real fireworks. There is also German Industrial Production. I think with the way these figures have been lately there is a better chance for a disappointment. We have seen larger misses to the downside and very small revisions upward so to think much has changed to warrant a surprise to the upside just don’t compute. However this will take a back seat to NFP later too.

The US Non farm payroll expectations seem to have set the bar pretty low for this release so the chance for a surprise upward is there and that’s what I figure they would want to see. However depending on how big it is will determine any sustainable move. The way I see it is if its close to the expected 89K it will be USD negative. The reason is that amount of jobs being created is dismal at best and shows there is really no recovery going on in the US (big surprise) and with the Fed having unemployment as part of the mandate there will most likely be more expectations of ramping up the QE figures. Its hard to say but it dont seem to me that there would be a scenario that is USD positive without a large miss to the upside and the Unemployment Rate dropping a notch. later there is Prelim University of Michigan Consumer Sentiment but this news hasnt been creating much volatility lately and I don’t expect that to change.

Friday Humor

This Article is taken from

How Is It That The US Can Elect Such Fools?

Its easy. All it takes is the other party candidate looking like the bigger fool.

I about fell out of my chair laughing when I saw this article. Its short and sweet but goes to show that politicians are some of the most self centered idiots on the planet. It was about how Obama is pushing to be able to raise the debt ceiling at will to what ever he determines is good. Here is the title of the article.

The US Is Not Egypt But Is Obama About To Go ‘Morsillini’

What makes this comical and show our President for the fool he is is that he should be smart enough to know that the debt ceiling is what has kept the USD as the worlds reserve currency. Remove that and give one man at the top the ability to increase it at will or as the article says “demanding the power to raise the debt limit whenever he wants by as much as he wants, he [Obama] showed what he’s really after is assuming unprecedented power to spend taxpayer dollars without any limit” is just nuts. Who in their right mind would give somebody credit in that situation?

What do you think the Chinese or Japanese (the largest holders of US debt) would think of such a move? I know what I would do. SELL SELL SELL before the others could to try to minimize my losses and then we all know what would happen. Bye Bye USD reserve status, USD collapse, economy crash, etc, etc, etc.

If our president don’t know this then somebody should really inform him. The good thing is the Republicans blocked the vote on it so we are safe for now but I have my doubts this will be the end of it.

Now before the FBI comes crashing in my door I should say that its not a good thing to bash the US President and I would happily apologize if he ever started doing what the country really needs. (HINT: Spend Less, alot less) 🙂 However I am a realist and I am only stating the truth. Its not bashing in my view if its so blatantly obvious that my 10 year old daughter can understand only someone with a warped sense of reality would think they could get away with such a move and all would still be A OK. But then again its a crazy world we live in.

Have a great weekend


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