January 23, 2014 EUR/USD, GBP/USD Daily Analysis
The EUR/USD price action yesterday does show a little conviction during the US session but I am not all that convinced with them running it right back down to close at the lows of the day. Today the best option will be to keep an open mind on direction again and look to trade from the more significant levels. We already have a test of yesterdays lows during the Asian session s that adds to the significance of the 1.3534 level but being still close to the middle of the range any entry there during London will need to show that they will not let it pass there for a long position. Otherwise the safer trade long will be lower at 1.3516. The same scenario it true for any sorts. The 1.3568 level is still valid due to the rejection it had twice yesterday but the higher level at 1.3580 has much more confluence with proven selling pressure at the breakout and hourly 200 ema sitting right above.
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The GBP/USD has made the third push. I have to admit these pushes are some of the sloppiest I have seen but it has finished them running into a significant daily level at 1.6575. I should also mention there is a higher high at 1.6602 they may test before a reversal to push out weak holders. At this point with the relatively good data coming from the UK there is a decent chance thy wont have much taste for the reversal today but that is what I expect before breaking to the upside. We and they just cant deny that the UK is seemingly the cleanest dirty shirt in the room these days. Im sure all who read this commentary knows I am positive this will eventually blow up in their face but it can also last quite awhile before that happens. It will be rerun of what threw the markets in the tank in 2008 but on a smaller scale than what happened in the US. Therefore how much it impacts the world economy will depend on how exposed other countries are to their markets when it does go pear shaped. At this point I can only hope that investors, pension and hedge funds have learned the lessons of the past but to be honest it doesn’t look like it right now.
I will have a bias for the reversal today while still being open for the extended push due to the UK looking best data wise. For my bias for the short to play out the best thing to see will be the topping formation form as they test 1.6602 then see clear manipulation showing they wont let price pass there. Since there may be enough conviction that they don’t need to push out weak holders I will be open for the long at the 1.6529 level if I miss the short for the reversal. If we do get conviction above 1.6602 then a pullback and see manipulation at 1.6580 I will be willing to take the long there. If 1.6580 don’t hold after conviction to the upside the Asian lows at 1.6554 will be the next level I look for a long.
Forex News Today
The news events to watch during the London session today are German and Euro Zone Manufacturing and Services PMI data. I expect these will be as expected or close. If by chance the German figures disappoint then we will probably see more downward movement on the EUR/GBP while the GBP/USD pushes up like we have been seeing much of lately. Otherwise I have my doubts we will see much but manipulation from these events.
The US has Thursday Unemployment Claims along with Existing Home sales data a bit later. With Unemployment becoming less relevant it will need a large miss to create any sustained move. Otherwise if the housing data misses big either way we may get some substantial manipulation but I doubt it can create a sustained move either.
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