Text summary of the video:
First thing's first, yesterday at 04:38 EST we got a big tape bomb in the form of a joint statement from Japan, Korea, and India coming out in support of the USD as their reserve currency even if US Sovereign debt was downgraded. This was a pretty big deal and created a very strong dollar reaction. The question is, will this be a lasting effect and spur even more USD short covering? I think maybe, maybe not. We need to look for more confirmation and as I mention in the video, confirmation will be a EUR/USD break of 1.4100... until that happens we're likely to trade in a range or stay event risk driven waiting for the next big tape bomb to either help USD strength along or refute it and zoom to EUR/USD highs yet again. By the way, sorry I'm getting the signal out a bit late today, but I put a lot of work into tonight's video and it took me longer than expected to work through it with everything that I felt I needed to go over.
Stocks may have short term bottomed today around 925 on the futures or they might have one more lower low dip to go, but they should be building a base for another run to higher highs in a wave 3 rally that should take us near 1000 on the S&P, so it's time to start gearing up for a short to medium term long in equities; however, keep your risk a bit low since the bigger badder move will be the large downtrend coming off the eventual highs, and you never know... it might come early.
Gold and silver have either topped long term here, or are continuing to form a top. I still recommend either entering short or holding short through any
volatility that develops. The big confirmation level is 940 on gold... we break that, then we can rest assured the bigger down move to or below the October lows I've been calling for is underway. For news tomorrow, there's a lot to cover:
0400 UK Halifax House Prices m/m (-1.0% expected) - This isn't a huge mover, but should get some action with all this volatility on GBP. Be careful though because this number tends to be leaked to trading desks from time to time.
If it comes out at -1.8% or lower, GBP/USD should sell off 20+ pips
If it comes otu at 0.0% or higher, GBP/USD should rally 20+ pips (positive GBP action right now may be a harbinger of a positive number being leaked)
0700
BoE Interest Rate Decision (no change at 0.50% expected) - If they move rates, that would be huge but there's little to no chance of that. The price action will be determined by their statement and any surprises that come out of it. Also, if they expand their Asset Purchase Facility by the allotted $25 billion, then that's GBP
bearish, if they refrain from expanding and hold it steady at $125 billion total, then that's GBP
bullish.
If they raise rates, GBP/USD should rally by 100+ pips
If they cut rates, GBP/USD should plummet by 100+ pips
0745
ECB Interest Rate Decision (no change at 1.00% expected) - No statement likely to be released at this time. Only 2 economists out of 54 surveyed expect a cut, so it's unlikely but possible.
If they raise rates, EUR/USD should rally by 70+ pips
If they cut rates, EUR/USD should fall by 70-100+ pips
0830 ECB's Trichet's post interest rate speech - This can be a difficult one to trade because there are so many things to look out for:
1) Hints on potential future cuts: obviously strong hints of future cuts are EUR/USD bearish, and refuting that idea would be bullish
2) Details of their bond purchase program: If it is expansive and ambitious, that's EUR/USD bearish, if it is small and more of a token gesture, that's EUR/USD bullish
3) ECB staff projections - These are rumored to come in pretty bad forecasting continued negative growth through 2009, flat growth in 2010 and a few months of negative inflation (disinflation) before it turns back positive. If the actual projections come out even worse, that's EUR/USD bearish, and if they're not as bad as this, then that would be EUR/USD bullish.
0900 CAD Interest Rate Decision - They will not move rates as they've indicated they plan to leave rates at 0.25% for about the next year. The likely price action will come as a result of whether they plan to institute quantitative easing. Anything from strongly considering quantitative easing to announcing a plan to do so would be clearly USD/CAD bullish, while clearly deciding to refrain from quantitative easing would be USD/CAD bearish.
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Forex Trading Signal 06/04/09 -
06-04-2009, 06:49 AM
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