June 26th 2014 Daily EUR/USD, GBP/USD, Gold Analysis
The EUR/USD made the push to test the recent highs yesterday thanks to a massive miss on US GDP figures. One more print below zero and the US will be in full blown technical recession. I say technical because the way the government recognizes recession is three GDP prints below zero in a row, even though pretty much everyone knows the US never really came out of the recession in 2009 like they said. Half of the GDP prints since then were actually within the margin of error of being positive or negative during that time, of which they never mention in the media just to keep the masses from knowing the true state of the economy. The US has been experiencing stagflation in reality. Now, with this problematic GDP number they may just have to admit it since the inflation real people are dealing with is still there and the prospect of the government being forced to recognize the shrinking economy there is good reason to come clean, although I have my doubts.
Today I will be open on direction since it did only test the recent highs of the chop but it sure does seem as though a break is in order to test the next daily highs at 1.3670. The best level for a long right now is Tuesdays highs at 1.3626 but I would like to see them run it up a bit during Asia before the stop run below. As members know I don’t require a stop run especially in a case like today with the end of day lows backing the Asian lows right now as well. Having said that there is the break out level just below at 1.3618 that they push to if they cant widen the Asian range a bit more this morning. If there is no long opportunity I will be open for the short at the highs at 1.3642 and 1.3650 but it will need to be clear they wont let price pass with more than one trapping pattern. In all honesty I hope to be long waiting for the break.
The GBP/USD has the same reaction to the bad GDP print from the US potentially making the first push false. It did show the conviction below Tuesdays lows so anyone who did take an entry short and didn’t get out before the news took the hit.
I will still have a smaller bias for the short today but if the USD weakness holds out then this pair will rise along with the EU so I will be being more open for the long with a good set up as well. The best level for the short I see is the 1.7000 psych level. The level that has the most confluence for the long is at 1.6971 at the hourly 200 but with the two daily levels just below I will be very cautious taking an entry there since its proximity to current price is so close. If it does manage to test the lows at 1.6952 I hope to be short from the yesterdays highs looking to book profit.
With the fundamental picture looking more bleak for the US and gold holding the range for the last four days a break to the upside seems most likely to me even more now. If any sort of panic sets in gold will benefit. It s being supported by the daily 200 very well and once a break of 1327 goes there is a monthly high just above as well as a daily high from March that has a slight possibility of holding it back but I have my doubts they will once the buying starts. At that point a run to this years highs at 1391 is highly probable. Next is the 1420s where they may feel the need to spend the money for a smack down. The best place for a long is down toward the range lows at 1313.79 or just below but I wouldn’t be surprised if it ran off from here.
Forex News Today
The calendar is rather slow until we get yet another speech from BOE Carney today. Of course anything could happen so if I am in a GU trade with out my stop at break even I will be closing before he opens his mouth.
The US has Thursday Unemployment Claims and some lower level inflation data I don’t see making much noise since they will still be digesting the GDP data. If the Claims disappoint big then the impact will be bigger as they add that to the bad GDP figures but a better than expected number will likely be ignored unless its massive. Of which the chance of that is slim to none. There is a Fed member speech from Bullard later in the day as well.
The Asian session tomorrow has Japanese Unemployment and Inflation data to watch out for but I wouldn’t expect much from them considering the Yen has been moving mostly on BOJ data lately.
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