GBP/USD And EUR/USD Give First Potential Push Down – October 6th 2015 Fx Analysis
UPDATE: I just posted the August trade result and analysis video. Check out the new video by clicking here…
I want to touch very quickly on US Equities today before we get into the Euro and Pound. As you can see I’m using the same chart that I did yesterday for the S&P. Ever since the first drop in late August I have been a broken record about the 50-70% retracement area. As I’ve said many times before this area is historically what separates a short term drop from the start of a large move to the downside. As of today’s close we are right back at the 50% retracement area and the 70% retraement line is right around 2045 give or take a few points. The bottom line is we are in the area where the market was previously sold off and continued downside is the higher probability until the market breaks and holds above this area. That does not mean you should randomly be shorting the market during the rise. In fact I would not even begin to look short until we have a bearish daily close. When or if that does occur I will make mention of it so stay tuned.
Potential First Push Down In EUR/USD
On the NFP spike the market pushed into a major area and created quite the large stop run. This occurred in both the Euro and the Pound and the Pound actually produced a very nice short setup for us. Today both pairs were again rejected after a test of the highs. The EUR/USD was not able to make it to the previous highs before again getting rejected. Today’s move down just about hit the ADR and thus looks to be a potential first push to the downside. At this point the reason I will still have one lower manipulation point listed is because we are holding longer term support. Until that goes, I don’t think you can trade it with a full downward directional bias. Keep in mind there is wide gap in between the two upper manipulation points and as such we could see a new level form in this area.
GBP/USD Rejects Another Test Of Higher Prices
The Pound created yet another stop run of the highs. Unfortunately today’s short we were not able to take advantage of again due to the economic data pushing the price to far away to allow a proper risk to reward ratio trade setup. During the NY Session the GBP/USD did produce a valid long setup from which I took a -20 pip loss. Overall it was a quality trade setup but the directional bias stifled any short term push back to the upside.
Today I will be trading the Pound the same way I’m trading the Euro. I do believe the push to the downside is the higher probability but I want to leave in the major lower manipulation point. The Pound also has a wide gap in between the two upper manipulation points and as such we could see a new level form in this area. This only becomes of interest to us if the first upper level breaks without producing a valid trade setup short.
Forex News For October 6th 2015
ECB President Draghi Speaks 1:00 PM Eastern: While this is on the very tail end of when I would consider taking a valid trade setup, it is still well within the where we could be holding a trade and as such something to remember.
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