By FX Insights Moderator,Yet again we have another tame day in the market... but, we have some things to discuss and consider...
First, lets talk about today's retail data -- to my surprise and the market's surprise, the data was a big upside surprise... we did see the euro back-off initially, but I think we saw limited downside as the market was probably thinking the same thing I was: downward revision coming next month...
I don't believe those numbers at all, but hey, I have to play the hand I'm dealt...
As far as Eurozone industrial data goes, as we forecasted, it disappointed to the downside, coming in at -0.2% vs. an expected 0.5%. Once again we have more proof and evidence that growth is slowing in the Eurozone and this will put pressure on the ECB to cut rates at least once this year... stay tuned as this story continues to play out in the weeks to come...
Fundamentally, we have a monster day tomorrow. We start with key German, French, and Eurozone GDP, and I do mean this is key as GDP is a tremendous measure of growth... I'm not convinced we'll see any mega downside disappointments as this data is somewhat lagging as it relates to the real-time growth situation, but I'm certainly not going to be surprised if the data comes in softer than expected as growth is certainly slowing in Europe...
Then we have U.S. Trade Balance, Initial Claims, Bernanke, followed by Trichet...
With the USD remaining terribly weak, I would suspect a decent Trade Balance, the key for the USD is for the Trade Balance to come in at or lower than expected... a softer number would keep additional pressure on the dollar vs. the euro...
As far as Bernanke and Trichet goes, I have no clue what they will say... either one could make things sound really good or really bad, so it's anyone's guess... lately, Bernanke has remained dovish on economic conditions and dovish on interest rates... Trichet has started growing more dovish on growth but remains hawkish on rates... so, prepare for anything!
EUR/USD:
As we spoke about yesterday, the euro is trading within a somewhat confusing range... it's still making higher lows, but again, we bounced hard off of 4600 and came down...
We flirted around the 4550 key level, eventually to move up and stay over during the duration of the NY session, but as I type this, the euro's moved back into the 4560's...
I have to assume the market is waiting for tomorrow's big data... but the longer we stay in this tight and weird range, the higher the probability grows that we need to make a bigger move soon... maybe the market will wait for tomorrow of Friday to do it...
I'm trading the range and playing things extremely tight... I only took two trades today, which is about the least I've taken in a single trade day all year, and I will certainly not keep my accounts exposed to any risk heading into tomorrow's big fundamental day, I suggest you do the same...
Price Action:
Staying on the recent topic of price action and using EUR/USD 30-minute price openings, I'd like to give you another perfect price pattern that played out right before our eyes this morning... we were discussing it in the chat and I know quite a few traders took a trade based on this price pattern and took some easy profits from the market...
Here's what we observed:
At the 10:00 a.m. price opening, we saw the euro make a bottom in the 4530's and then move up to the 4580's... leading us to the bottom of the range was a very consistent consecutive pattern of lower half hour price openings, and it played out beautifully to show us what the support was and where to get in on a good euro long that would pay at least 20 pips... this pattern, of course, paid out much more than 20 pips...
6:00 a.m. -- 4592 (high opening of range)
6:30 a.m. -- 4587 (1st lower opening)
7:30 a.m. -- 4584 (2nd lower opening)
8:00 a.m. -- 4582 (3rd lower opening)
8:30 a.m. -- 4581 (4th lower opening)
9:00 a.m. -- 4574 (5th lower opening)
9:30 a.m. -- 4544 (6th lower opening)
10:00 a.m. -- 4538 (7th lower opening/euro reaches bottom)
So, holding true to typical EUR/USD price action patterns, we have 7 straight lower price openings, we hit a bottom, and then we move up about 50 or so pips to the top of the day's range...
Honestly, it can't get much easier than this... I know a lot of traders tell me they still have no understanding or concept of using this price action pattern technique, but it's as simple as writing down the opening price and counting to 7... it's just that easy... if I could break it down and make it easier I would, but if you can write numbers and you can count to 7, you should be able to use this powerful indicator...
Does the the euro always follow this same exact pattern? Of course not, there is no such thing as always in the FX market... but we've seen this same exact pattern play out thousands and thousands of times, so the probabilities are there for sure...
Yesterday, Yeno called a live trade in the chat to short the euro at 4600 and today the trade was closed for a nice 50 pip profit:
Click on ImageFinally, I have two new posts about fulltime currency trading that you'll probably want to take a look at...
Being a fulltime trader PART I
Being a fulltime trader PART II
That's all for now, see ya in the chat
-FX Insights
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