Ranging market

The advance US GDP number last Friday gave mixed signals. The GDP for the last quarter of 2014 was expected to increase 3.00%, but it only increased 2.6%. That gave a bearish sign to the US dollar traders and USD fell immediately after the release. On the other hand, the personal consumption which plays a very important part in the economy of the US increased. The GDP numbers for the third quarter were revised higher as well, from 3.5% to 5%.
So the sentiment turned to bullish about half an hour later when the market realized that the fourth quarter GDP number wasn´t that bad after all and it might be revised higher. That sent the Euro and GBP to the bottom of last week’s range against the US dollar, but it wasn´t enough to push below it. 

EUR/USD has formed a wedge and we plan to trade the extremes as well as a possible breakout.
We have explained this trading strategy in our strategy section under “Wedges and Triangles”

Today the market has traded within this range and neither the bears nor the bulls have the stamina to break outside of it. The Spanish, Italian and the UK manufacturing PMI came out slightly above expectations, so EUR/USD rallied to the top of the range at1.1350s and GBP/USD to 1.5090, but they failed once more. We plan to trade this range in the short term. The top side looks a little stronger so we feel more confident selling at the top like we did yesterday evening when we sold GBP/USD at 1.5085 shortly after the market opened. We feel a bit frustrated with ourselves though for not extending the profit target to 60-65 pips and for missing the opportunity to sell EUR/USD at the top a few hours ago. The US core price index and the manufacturing PMI are up next, so they might change the picture.
But we´ll be ready to trade the breakout of these ranges if it happens.