USD Starts The Week Strong Ahead Of Fed Rate Decision – 9/15/15 FX Market Analysis
As I pointed out in yesterday’s forex analysis I do expect USD strength ahead of the rate decision. To be more specific I favored the GBP/USD short on a longer term perspective but only if a valid short term setup provides the entry. I would caution everyone from assuming we have nothing but downside from this point forward. Remember the market often moves to the point of ‘most pain’. In other words the question to always ask yourself is, “what would cause the majority of traders to suffer”. I’m not the only one who favors USD strength ahead of the news and with that bias being pretty common I wouldn’t be surprised to see the market give one last shot at the highs before finally moving down.
EUR/USD Starts Week Bearish
From the start of the European session the EUR/USD was heavy. After an initial surge up that ended in a quick rejection the Euro really never made another strong move to the upside for the remainder of the day. Like was mentioned in yesterday’s forex analysis, I would expect the EUR/USD to be heavy right along side the Pound. I wish the EUR/USD had a better level to the upside for a stop run short but the bottom line is we did not have any upper levels from which I would have been looking to get short after a stop run. Because of that I would not have caught the move to the downside. When it came time for the start of the NY Session I did favor a reversal but we never reached out lower manipulation point from which I would have looked for the stop run to occur.
The last week or two has been a battle of patience for those trading just the EUR/USD and GBP/USD as we have seen far less trades than average. One thing I always stress to the members of DTFL is patience and discipline. Regardless of the trading strategy or trading time frame that someone uses, discipline and patience are a must. Boredom can be and often is the average retail traders worst enemy so as always stick to the plan. For today the plan will remain the same…open directional bias with any stop run from a pre-selected manipulation point being valid.
Current Market Update – One thing I forgot to mention…for those of you who are members make sure to check out the video preview for a further discussion on the upper levels on the EUR/USD. Also its important for everyone to keep in mind that if a listed area is broken prior to the start of the European session that level gets thrown out….very important point to keep in mind each day.
Possible First Push Down On GBP/USD
The Pound came close to providing a first push to the downside. If we had closed a bit closer to the lows and not had as much retracement then I would have probably called this a first push down and only looked for the second push to the downside today. With the retracement that we did have, I feel better keeping my directional bias open until the market commits to my short bias. The Pound has a level that is possibly going to break before the start of the session as does the EUR/USD. If this occurs then the level gets thrown out as already mentioned above.
Today the Pound was a bit of a tease with the stop run of the highs. Had it push about 5-6 pips higher on the first initial push into the highs it would have then produced a perfect stop run and confirmation entry short. Our forex trading strategy has very specific rules. The nice part about specificity is that it makes it much easier for new traders to learn to trade forex successfully. The reason for this is the entry criteria we use is 95% mechanical and therefore discretion is taken out for the most part thus allowing emotion to be removed as much as possible. Doing this is a huge help for struggling traders who never seem to be able to apply a rule set consistently. The downside is that it doesn’t allow much wiggle room for being more aggressive when you favor a direction such as today. This is a compromise I’m happy to make over the long haul.
Forex News For September 15th 2015
UK CPI Y/Y 4:30 AM Eastern: I’m a bit conflicted as to the expected number on this release. www.FastEconomicNews.com is rarely wrong in regards to the expected number and they have -.1 for this month while everyone else is expecting 0 to be the number. This month I would go with 0 as the expected number and trade accordingly to any deviation from there. Over the last 6 month we have had a .1 deviation from the expected number 3 times. Every single time an entry within 30 pips of pre-release was paid quite nicely over the next few hours. If we do get a deviation and you are able to enter within 30 pips of pre-release in the direction of the deviation then history favors that trade in a big way.
German ZEW Economic Sentiment 5:00 AM Eastern: This month 20 is the expected number and any deviation of 7 +/- from the expected number should create a 15+ pip spike. The follow through on this news is however very inconsistent and thus I would not jump in expected to see this economic data start a trend.
US Retail Sales M/M 8:30 AM Eastern: Like most other US data, US Retail Sales has been moving the market a lot more over the last 6 months. Like all other economic data, without a deviation from the expected number you won’t see much. Retail Sales is expected at .4 and Retail Sales Ex-Autos/Core Retail Sales is expected at .3 for the month. This number has been very hit and miss for the follow through after the release. The spike on the initial release is guaranteed, but make sure both pieces of the data are in agreement before attempting to trade any expected follow through.
Want to learn the bank trading strategy, join our weekly live training room, talk to members in our forum, and have access to lifetime support? Learn more by clicking here.