US Equities Fail To Make New Short Term High – 9/10/15 Forex Commentary
I had to cram a lot of information into the chart below so I’m going to break it down one piece at a time. First of all the large red rectangle box is the 50-70% retacement of the initial market sell off. This is the are that I have been talking about for the last 2 weeks as being the decision point historically. When the market cannot break back above this point and then sets a new low the market sell off turns to a future crash. As I have illustrated by the two circles we have already entered this area twice and have been rejected both times. Is that all we are going to get? I cannot answer that question for certain and I don’t think anyone can. If we are going lower overall I would assume they will make one more stab at a deeper retrace before driving the price down. Again, that is assuming lower prices.
Another interesting point is the way the price is compressing. Price compression is always an indicator of the next future market move and we are quickly approaching the decision point. A break below and daily close below the lower ascending trendline would likely signal further downside as well. Remember equities are much more emotional in the way the price moves as compared to the forex market and as a result basic charting principals tend to be more important. Key level breaks that hold tend to have a higher probability of success. Either way if I had any money invested long term in equities I would be watching what happens at the retracement areas as well as the lower trendline that is currently being respected by price. Normally I don’t spend this much time talking about US equities but this move could prove to be rather important.
EUR/USD Shows Signs Of Life
Yesterday I was talking about the inverse trend channel that we had forming on the EUR/USD. During trading hours we did not have a valid setup and today I will be treating the Euro the same. With the push up late in the day it does curb my bias for more continuation to the downside but this could still be one last false push into the previous highs. If we continue to remain above 1.1200 then I would expect further upside. Once that level goes and we stay below then further downside becomes the higher probability.
As of right now I think the smart money is to continue trading the manipulation points to both sides of the price and thus remain open to any valid setup from a pre-selected manipulation point.
55 Pip Range Holds GBP/USD
After two very strong days moving to the upside the GBP/USD was stuck in a very tight range. One very simple aspect of the forex bank trading strategy is that when the market does not break a pre-selected manipulation point there cannot be a trade. Yesterday we never broke the upper or lower manipulation points and therefore no valid trade came together. Today not much changes with the Pound. I still think on a wider perspective the GBP/USD is going to see move downside and could this stall be the top? That question, like all other market direction questions, is something I will let the market answer. Should we see a stop run of one of our upper manipulation points then and only then would I look to short the Pound. The only other option for a short would be what we term a backside of a level setup.
Forex News For September 10th 2015
UK Official Bank Rate Vote 7:00 AM Eastern: This is going to be a very important decision like last time. The real key here is not the actual rate decision as that will more than likely remain unchanged. Obviously any change would be important, I’m simply stating a change is unlikely. What is more likely is a change in the vote. Last month the vote was 1-0-8. The first number is those who voted to hike, the second is those who voted to cut, and the third is those who voted to keep rates unchanged. A vote of 2-0-7 would send the GBP/USD up at least a hundred pips in the first few minutes. Conversely, a vote of 0-0-9 would send the GBP/USD tumbling by at least 100 pips in the first few minutes or less.
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