June 27, 2013 Daily EUR/USD, GBP/USD Analysis
We have our second push on the EUR/USD today. It didn’t give s an entry since it couldn’t even come back and test the Asian highs after playing the break out traders to the lows. My bias will be for the short today but there are some key issues I need to point out. First I have a sneaking suspicion they will make the deeper pullback. The reason is they have pushed it to a key daily level at 1.2992 and the support kicked in nicely. Next is it has broken down below the daily 200 EMA and had a nice close below. My thoughts are they will test that again from below before they push it on. That is sitting right at the break out level of 1.3053 along with the two daily lows just above. The break to the downside through the daily support is going to take some conviction and I would expect them to try and push out some shorts and induce some longs before it goes.
The best level will be that 1.3053 for the short today but depending on how we see the Asian range play out it could very well turn at the Asian highs. Having said that it don’t look that good since its breaking up as I type but there is still time left to see it reverse this morning.
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The GBP/USD has made the clean first push down with a nice entry when London started yesterday. My preference was after the second pin after the stop run confirming the first pin was manipulation. You could have gotten a better during the second pin using the confirmation entry but it was right at the limit of the 5 candle rule so added a little more risk. In cases like that I like to wait for another candle pattern so the close of the second pin was a great entry for a run of 70+ pips or even 120+ if one had the nerve to hold thru the US pullback. If you missed the London entry there was also a good one during the US session that had a 80 pip run in it.
I will cover those entries and a EUR/JPY trade that my good friend Elizabeth was in with an aggressive entry. So she chickened out and closed with an 8 pip loss just before it fell thru the floor. Don’t break your rules guys. Even with aggressive entries the market will tell you if your wrong. Don’t get freaked out by a little manipulation. They are counting on that and one of the main purposes why they do it.
My bias will be for the short here today also and the best levels to see it at are the 1.5348 area. I say area because there is the Monday daily low just below it where they might not let it pass. Otherwise if they do intend to run the deeper pullback on the EU we may see it go all the way to 1.5396. As you can see on the chart below there is cause for a bit of concern with the intraday pushes. I didn’t count the one in yesterdays commentary due to it being only 80 pips while the ADR is running around 120. however the second and third yesterday do look very pretty so it wouldn’t surprise me if some of our topping/bottoming formation traders are long already. I just wouldn’t be holding for more than a 50 pip pullback if I traded them like that. Which I don’t.
Foerx News Today
There are a couple events during the London session of note today. There is German Unemployment data that could cause some manipulation with s big miss. The UK has their GDP figures which could surprise but I doubt it. The big one is an Italian 10yr bond auction. Since the bond markets have been a bit jerky lately this could not go so well. Then again to support the system I expect it wont be all that bad yet. Spreads will probably rise a little but not enough to be of concern yet. I will be watching out for that one.
The US has Thursday Unemployment Claims expected to drop by 10K. If we see a surprise to the upside it will be negative for the USD but I think it would need to be big in order to create a sustained move. Later is Pending Home Sales. probably nothing to see there. Last is FOMC member Dudley speaks. With the Fed members bouncing around like jumping beans as of late this could be interesting or it could be more of the same. “Were gonna taper, were not going to taper, we feel like tapering, we don’t feel like tapering, we really have no clue what the heck is going on but we are in control”. What a joke!
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