July 11, 2013 Daily EUR/USD, GBP/USD Analysis
Well there we have it. Bernanke and his lackeys have pretty much admitted they have no clue. They will probably not taper now and keep up the purchases at the level they are at just to keep the market from crashing. He has also opened the door to upping the ante on the purchases saying “inflation and jobs saying more Fed stimulus is needed”. This is just nuts. At this rate we are going to be seeing some choppy moves in the coming weeks since as I mentioned in previous commentaries “The race to the bottom has gone into warp speed”
Looking at the price action today I am starting to think warp speed may be an understatement. I cant remember the last time we saw the EUR/USD pop an ADR level by over 100 pips during the Asian session. Now we are seeing the pullback showing just how ridiculous the move was but this is what we will have to deal with today. My thoughts are there is profit taking and some pushing out of weak longs at this point but where they turn and make the next push up from is questionable. As I type this I see its finding some decent support at the psych 1.3100 level and this may be as far as they let it go this morning but what London does is what I will be waiting for. I have marked several daily levels that were broke that we should be seeing some reaction to today. I would expect they will want to try and push out as many of these Asian traders as possible and run it as low as yesterdays high at 1.2986 but the 1.3027 will be a good turning point also being just below the 4hr 200 EMA.
I should also mention that there is the chance they retrace this whole inefficient move all the way to 1.2927. The reason is even though Ben has a higher chance of adding to the bond purchases there is absolutely no reason for a stronger Euro considering the fact that Europe is in dire straits and only getting worse. This 400 pip range we see here could easily be where the EUR/USD is stuck for quite some time until we either see the additional QE from Ben or something happens in Europe that starts the house of cards to tumble.
The GBP/USD had the same move as the USD was decimated across the board. It has also blown out its Average Daily Range this morning during Asia and is pulling back. As with the Euro they will likely push all the way back to the open today at least before most likely pushing back up to test the highs. The best level I see for a potential long is the 1.4980 level since the psych 1.500 didn’t see much respect during the push up. Its possible they will go as low as 1.4916 but I have my doubts.
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Forex News Today
Scheduled news releases are light again today and I expect they will be still digesting Bernankes statements regarding the reality of he cant taper bond purchases at this time nor any time in the future. It seems as though the wiggle room I thought he was going to give himself for raising purchases down the road will not happen and if anything he is going to raise them to probably 100billoin a month in the future.
There is the ECB Monthly Report due today but considering what Ben did yesterday I have my doubts Draghi will be able to upstage good old Ben. Plus what really got the markets going was the speech Ben did later in the day and Super Mario don’t have one of those scheduled.
The US does have weekly unemployment data expected to drop slightly and I don’t expect much barring a big surprise. If it does have a big miss to the upside then the USD will weaken further as the potential for Ben adding to the QEternity goes up.
Should be an interesting day for sure.
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