Forex Price Action Setups (NY Close) Apr. 26th

Spain’s Credit Rating Cut to BBB+, Housing Data Surprises
US Pending Home Sales surprised to the upside giving a brighter outlook on the US economy which gave a boost to risk on the day with the DOW gaining 113pts or .87% while the S&P lifted 9pts or .67%.

But we are not buying this as as sign the US economy climbing out of the hole.  Why?  The purchases were mostly cash buyers.  A sign the economy was turning the corner would be from the middle class being the major driver of the sales, who are not cash buyers, and since the banks are not lending, this means wealthy investors both domestic and abroad are the buyers.  Thus, the money and sales are not broad based, but from a concentrated few.

Add to this picture Spain’s credit rating being cut to BBB+ and people will once again be reminded the issues abroad have not gone anywhere.  I’m honestly not sure how this house of cards is being held up, but with the currency markets being so manipulated, something will have to give and it won’t be pretty.

Tomorrow should be volatile with a slew of economic announcements along with investors reactions to the rating cut for Spain.

Gold and Silver Pin Bars Play Out
The Gold and Silver pin bars we discussed yesterday have given a lift to prices for the precious metals duo with both gaining on the day.  No surprise Gold has held up better as it was not making a new low when the forex pin bar printed (which silver was).  Silver is still the weaker of the two, but we may have a base in place at $30 for the cheaper metal, while gold appears to be building as the price action is showing characteristics of accumulation and building a medium term base with $1612 being the bottom. We like dips into $1625-35 range if the structure holds for an upside attack on $1675 and possibly $1695.

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Upcoming Economic Announcements:

GBP Nationwide House Prices s.a. (MoM) 00.00GMT 20.00EST
AUD HIA New Home Sales (MoM) 01.00GMT 21.00EST
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EUR German GfK Consumer Confidence Survey 06.00GMT 02.00EST
USD Gross Domestic Product (Annualized) 12.30GMT 08.30EST
USD U. of Michigan Confidence 13.55GMT 09.55EST

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