Central banks in Europe finished a busy Forex day. Just as expected, no changes to benchmark interest rates were made. European Central Bank stayed with 1%, while Bank of England kept rates in UK at 0.5%. It was interesting to see how markets reacted to the news. Nothing extraordinary happened, to be sure, but some movement was present. Euro largely fell following the announcement, while Pound had, on balance, a good day. It gained in relation to some currencies and stayed pretty much unchanged against few others. Everybody is quoting the Greek issue behind EUR poor performance. Maybe, maybe not, bottom line is it dropped.

This effected my possible trade in EUR-CAD discussed in last post. When I wrote it market was about 55-60 pips away from potential entry. I didn’t expect much to happen before policy meeting, but price moved fairly swiftly and started to reach that level . My rule is to not to get in trades before these announcements, in currencies that might be effected. Had to let it go, no trade. Euro dropped in the aftermath, but the new minor high at 1.3460 looks even better for long entry.

This new high is almost at 100 SMA, which makes it more important. With this in mind, firm buy order at 1.3465 is placed, targeting 1.3575. Now, I don’t know if Euro will make a run here, but IF it does, that’s where I’d like to get in. In reality, with the pair dropping now and Friday coming about, I don’t expect much until next week.

Trade in the Beast from the Parity between the Dollars post, was less than impressive. Price action had been as expected, for a while. Low at 142.10 or so was tested, undercut a by a small margin and then moved down. Entry was at 141.73. Trade made what seemed like a good progress, but then price bounced, strong hammer developed and move direction changed. While it could only be a bounce within developing down trend, I didn’t want to find it out with position on the line. Trade was closed for a small loss of 31 pips.

With AUD-JPY I was looking for a reaction around 86, with hopes of later on selling this low. Well, price went through it, and there reversed on the serious looking candlestick, just like the beast. No trade, yet. Right now I’d like to see solid reversal pattern around 87.00 and short it there. It all depends on what market forms on 4H chart. First target would be 85.85 and second at 85.00. Now back to watching charts….

Mike K.