Forex Commentary: GBPUSD and Gold break lower, 18th October 2011

Trading Setups / Chart in Focus:

GBPUSD

Today, the GBPUSD broke below the mother bar low of the inside bar from yesterday that formed within the resistance area between 1.5700 – 1.5900. If price holds below this resistance on a closing basis, we see the potential for further movement to the downside. We may also see some consolidation around this resistance area if price cannot sustain itself below 1.5700.

Gold

The fakey pin bar setup in gold that we discussed in yesterday’s members’ commentary has broken the mother bar low today and triggered a short entry. We see the potential for this market to move down into the $1580.00 support area if price can stay under the 8 / 21 daily EMA resistance layer. This setup provided a nice risk reward scenario for traders; let’s see how it unfolds the rest of the week.

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Forex Commentary:

The EURUSD closed today up about 15 pips after losing ground early in the session but recovering into the NY close on news that Germany and France are closer to a deal to boost the euro-zone rescue fund.

The EURUSD last traded at $1.3750, up marginally from $1.3746 at the NY
close yesterday.

The British pound fell to $1.5708 from $1.5740 late Monday. The dollar fell marginally against the Swiss franc and Japanese yen.

The greenback was down against the Canadian dollar, Australian dollar, and New Zealand dollar today as well.

Gold moved lower today but did reclaim much of its losses into the New York close.

Other Markets:

On Wall Street today stocks made a late-day come back as positive news out of Europe regarding the euro-zone rescue fund worked to inject optimism into the market.

The Dow gained 108.05 points, or 1.58 percent, the S&P 500 added 24.52 points, or 2.04 percent, and the Nasdaq gained 42.51 points, or 1.63 percent.

Upcoming important economic announcements: 10/19/2011

4:30am EST: Britain – MPC Meeting Minutes
8:30am EST: United States – Building Permits
8:30am EST: United States – Core CPI m/m