Pound Crumbles Under US Data Strength – FX Commentary 3/12/15
EUR/USD Continues In Range
I could literally copy and paste my analysis of the EUR/USD from yesterday’s market analysis. At this point we remain in the previous range and all the listed manipulation points from yesterday remain the same levels I will be looking to trade from today. We did have a stop run of the lower manipulation point, but the lack of pullback prevented a valid entry. Today is going to be a big day for the EUR/USD and the range is likely to be broken with the news later in the day. A bias towards further expansion of QE will likely put heavy pressure on the Euro to the downside. Should be an event filled day.
Pound Tumbles After Better Than Expected US ADP Number
Early in the day the Pound had a worse than expected Construction PMI which was followed by a better than expected US ADP. The combination proved to be enough to cause heavy downside with the GBP/USD moving nearly twice the current average daily range (ADR). The GBP/USD did provide a stop run short off the backside of our first lower manipulation point. The first lower level broke and became invalid when two candles opened and closed below it in succession as per the rules of the confirmation entry. This opens the door for a backside setup which is exactly what happened. While I know many hit a full take profit, it should have been closed before the 8:15 AM news if your following the trade management rules we use in the online forex day trading course.
In regards to directional bias, I would normally call this a first push to the downside as we do have a clear break below the previous range. The reason I will continue to keep the directional bias open however, is because the move was twice the ADR. As this is an abnormal move it has a higher probability of getting retraced and thus we keep our options open. At this point I only have one upper and one lower manipulation point I would consider a setup from.
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Forex News For December 3rd 2015
UK Services PMI 4:30 AM Eastern: This month 55 is the expected number. Manufacturing and Construction have already come out worse than expected this week. Typically they tend to deviate in the same direction which does give Services PMI a higher probability of being worse than expected this month.
EU Interest Rate Decision 7:45 AM Eastern: Expected to keep rates unchanged with a slight bias towards bumping the deposit rate down 10 basis points. The big question is the QE decision in my opinion.
EU Press Conference 8:30 AM Eastern: Likely the be a very eventful release as the market is expecting there to be some changes to the current QE structure at the very least.
US Fed Chair Yellen Testifies 10:00 AM Eastern: As she will be talking about monetary policy I would expect some volatility. This is a good day to avoid if you don’t have access to the speech or have experience trading it.
US ISM Non-Manufacturing PMI 10:00 AM Eastern: This month 58 will be the expected number. This is one of the few pieces of US data that doesn’t create a massive spike but yet it has a strong history of showing continued follow though in the direction of the release far beyond the spike.