GBP/USD Finally Shows Some Life – 1/22/16 Forex Market Analysis
EUR/USD Tanks On Draghi Comments
The EUR/USD ended the day very mixed. Overall the market was very tame ahead of the 8:30 AM Eastern news. When Draghi eluded to further bearish ECB action the market responded with an immediate sell off. Surprisingly we made a complete retrace of the initial sell off and therefore future directional bias is questionable. At this point I will continue with the open directional bias. For today I have one lower and two upper manipulation points I would take a valid stop run from.
Pound Shows Signs Of Life
I think this is about the first aggressive move to the upside we have seen from the GBP/USD is close to a month. Today’s move satisfies the criteria for a first push to the upside as described in our forex course. When we have a directionally based market we only look to trade in the direction of the cycle. It is critical to understand that regardless of cycle, we still need to see a valid stop run of a pre-selected manipulation point to trigger a day trade. The main issue we have for today is the lack of lower manipulation points from which we could consider a stop run reversal to go long. At this point I have one lower level from which I would take a stop run long but we do have quite a bit of open territory for a new level to form. For those of you who are members of DTFL be sure to watch tonight’s video daily market preview as I discuss the possibility of a newly created level and how that might look.
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Forex News For January 22nd 2016
German Manufacturing PMI m/m 3:30 AM Eastern: This is not known as a big market mover but it is capable of creating a 15+ pip spike and therefore I would not carry a Euro trade into it. This month 53 is the expected number.
UK Retail Sales m/m 4:30 AM Eastern: Historically UK Retail Sales not only provided a very sizeable spike but it also provided very consistent follow through after the spike that was reliable. The last 3 releases we have seen the market completely reject the news and push back through pre-release in the opposite direction of the release. For this month Retail Sales w/gas is expected at -.1%
US Existing Home Sales m/m 10:00 AM Eastern: This piece of economic data is right on the edge of being a news item I would not carry a trade into. More than likely I would carry a trade going into this release. As long as I was sitting at break even or better on the EUR/USD or GBP/USD I would have no problem holding into this release. If you trade the USD/JPY then you have a higher probability of a larger spike. The larger spike about 6 months ago was supported by other data that was released at the same time and therefore I think it alters the actual response to this news and made it look larger than it actually would have been. For this month 5.21 is the expected number.