Given enough time, we believe that the real way to make profits over the
longer term will be to continue to hang onto trades, perhaps adding to a
position in order to increase its size every time we rally. The 1.20
level below should be rather supportive though, so we don’t know whether
or not the market will actually go below there. At that point in time,
it is possible that the trend will turned back to the upside, but
assuredly at this point in time it appears of the market is ready to
break down significantly. We have no interest in buying this market
until we break above the 1.30 handle, something that does not look very
The GBP/USD pair initially tried to rally during the course of the week,
but then turned back around to slam into the 1.60 handle. With that
being said though, it looks as if we have plenty of support in this
area, so we believe that the market will continue to bounce around in
this general vicinity. If we get a break above the 1.62 level, we feel
that this market should continue to go much higher, perhaps heading as
high as 1.72 given enough time. We have no interest in selling until we
get below the 1.5850 handle.
EUR/USD Technical Analysis: Half of Profit Booked on Short (based on dailyfx article)
The Euro continues to press downward against the US Dollar,
with prices probing the lowest levels in over two years. Near-term
support is in the 1.2500-34 area, marked by the October 3 low and the
23.6% Fibonacci expansion, with a daily close below that exposing the
38.2% level at 1.2316. Alternatively, a reversal above trend line
resistance at 1.2737 opens the door for a test of the October 15 high at
EUR/USD: Likely to stick around 1.2500 until the ECB on Thursday
Thanks to some of our institutional friends yesterday in the FXWW
chatroom, we discovered that there are some very large expiries in
EUR/USD at 1.2500 over the next few days. This will most likely keep the
pair stuck within 50/70 pips either side until the ECB statement on
The speculative market is very short of EUR and very bearish, but if
the ECB comes out with a dovish statement then we will probably see big
Sovereign reserve managers start to sell EUR in size. This is the
stand-off we are having at the moment. If the ECB is neutral, then the
speccy shorts will start covering aggressively.
So EUR/USD sideways until Thursday and then sharp movements one way or the other.
EUR/USD Technical Analysis: Euro Aiming Below 1.24 Figure (based on dailyfx article)
The Euro sank to the lowest level in over two years against the US
Dollar, with sellers claiming a foothold below the 1.25 figure. A daily
close below the 38.2% Fibonacci expansion at 1.2316 exposes the 50%
level at 1.2140. Alternatively, a turn above the 1.2500-34 area (October
3 low, 23.6% Fib) clears the way for a challenge of trend line
resistance at 1.2723.
We entered short EURUSD at 1.2710 in line with our long-term
fundamental outlook subsequently booked profit on half of the position.
The rest of the trade remains open to capture any further downside
momentum with a stop-loss at breakeven (1.2710).
EURUSD Scalps Target 1.26 Ahead of ECB / NFPs (based on dailyfx article)
if actual > forecast (or actual data) = good for currency (for GBP in our case)
[GBP - Services PMI] = Level of a diffusion index based on surveyed purchasing managers in the services industry. It's a leading indicator of economic health - businesses react quickly
to market conditions, and their purchasing managers hold perhaps the
most current and relevant insight into the company's view of the economy.
Nonetheless, companies recruited additional staff to the greatest degree in three months as capacity remained under some pressure, which was highlighted by a further increase in work outstanding.
The seasonally adjusted Business Activity Index posted 56.2 in October, down from 58.7 in September. Latest data marked the second successive monthly fall in the headline index, and October’s reading was the lowest recorded for 17 months, although the implied rate of growth remained above the average for over 18 years of data collection."
EUR/USD Revisits Recent Lows After Hammer Formation Falls Flat (based on dailyfx article)
EUR/USD has slipped back below the 1.2500 handle after a bullish signal from a Hammer formation
failed to find follow-through. As noted in recent reports the scope for
the pair’s advance was likely limited given the nearby 1.2620 barrier
overhead. With reversal signals now lacking a break below the recent
lows near 1.2430 may set the scene for a descent on the late August ’12
lows near 1.2250.
EUR/USD: Hammer Candlestick Falls Flat
Trading the News: European Central Bank (ECB) Interest Rate Decision (adapted from dailyfx article)
The EUR/USD may face another selloff in the days ahead should the
European Central Bank (ECB) adopt a more dovish tone and offer
additional monetary support to prop up the ailing economy.
Why Is This Event Important:
The ECB may take a more aggressive approach in expanding its
balance-sheet amid the growing threat for deflation, but we may see a
relief rally in the EUR/USD should the Governing Council merely make an
attempt to buy more time.
Nevertheless, ECB President Mario Draghi may promote a wait-and-see
approach as the central bank continues to assess the impact of the
non-standard measures, and the Euro may face a more meaningful rebound
in the days ahead if we see more of the same from the Governing
Council’s October 2 meeting.
How To Trade This Event Risk
Bearish EUR Trade: Governing Council Shows Greater Willingness to Implement More Easing
EUR/USD Daily Chart
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