Hey folks,
As expected, the EU and GU traded lower yesterday and broke through last week's lows. Now having blown lower, they've naturally recovered a bit. I'm not really expecting a very steep retracement here, so as I told the Diamonds room earlier, I thought "As I mentioned in the room last night, I entered a swing trade short on GU at 1.6440 with a SL at 1.6540 and TP at 1.6040. I do not expect to be stopped out." My best guess is as the European session gets rolling, we'll see yesterday's slight move up hit some downside pressure, especially on GBP/USD... but you never can be too sure. One reason to expect this is potential anticipation of UK CPI where the BoE may have given us heads up on some lower than expected numbers to come with their quarterly inflation report last week.
Gold, and Silver have now turned more comfortably to the downside. As you know, I've been long term bearish Gold and Silver since about the beginning of June through the subsequent ups and downs. Even though the properly anticipated bounce from their July lows went a bit higher than I expected, it looks like it's going to be much more down than up from here over the coming days, weeks, and months. I would see any further bounce on Gold (maybe to mid 940's) and Silver (maybe to 14.30 to 14.50) as good swing trade short opportunities as we should generally see lower highs and lower lows near term.
Stocks have finally validated my calls for a strong top soon and boy did they ever. With a clearly defined break of 992 coming right around the open of trading, we've confirmed that we're starting some form of significant downside. It's not quite too late to get in short since this is freshly confirmed, but it always helps to sell on bounces after a confirmation rather than chasing them and getting nervous. My targets are support at 968, then 957, then 930. If we somehow head much lower than 930 and the move is very impulsive, that will open up the possibility that the August 7th highs may be IT for this bear market rally from March. The odds still favor a rally from the low to mid 900's for one last attempt at new highs, but once we start testing trendlines below 900 on the S&P, those odds will start shifting dramatically towards another painful bear market. Long story short here... for the rest of the week, we're either getting a little more downside, or a lot, so look for shorts no matter what your timeframe. In news Tuesday we have 2 potential trades:
0430 UK CPI y/y (expected at 1.5%) - Based on last weeks inflation report, the GBP is quite sensitive to CPI issues, so any 0.2 surprise could get a strong reaction on GBP/USD. We may also see some GBP weakness in anticipation of the report as some may be leaning towards a low number. Whichever way the market moves before UK CPI, if there's a clear short term trend established, AND the news pushes the GBP even further in that direction, usually the news move will spike and reverse. If the news causes a short term trend reversal, then it's more likely to continue and extend over the course of 40 minutes to an hour.
If it comes out at 1.7% or higher, GBP/USD should rally 40-50+ pips.
If it comes out at 1.3% or lower, GBP/USD should sell off 40-50+ pips.
0500 German ZEW (expected at 45) - Lately, on decent surprises, the ZEW has been moving EUR/USD about 35 pips quickly, and then it seems all but forgotten after a retracement. While a I feel this indicator may start working better either this month, or sometime soon in future months, it's not a good idea to expect a huge resurgence to its glory days until we get at least one solid release as evidence.
If it comes out at 50 or higher, EUR/USD should rally 35 pips.
If it comes out at 40 or lower, EUR/USD should sell off 35 pips.
If it comes out at 35 or lower, EUR/USD should sell off in a more protracted manner.
0830 Various pieces of US news including PPI, Housing Starts and Building Permits - This news is likely to be a bit of a cluster**** and unless everything comes out in a clear direction (and maybe not even then), I'm not so sure it will be easily tradable. After Monday's scary equities selloff, most of the early NY action will be trying to get in front of the direction of the stock market open which will make fundamentals less important. We're skipping this news in the Diamonds room.
TRADE LIVE WITH SIR PIPS FOR $39.00 FOR 2 WEEKS
Sir Pipsalot has a live trading room, in which he trades these news reports. There, he shares his trades in real time, including exact entries and exits, and detailed explanation for every entry and exit. The service costs $299 per month, but we have a 14-days $39.00 trial. Go to Forex Diamonds and take advantage of this offer. This offer is for NEW customers only.
To our success,
Sir Pipsalot
As expected, the EU and GU traded lower yesterday and broke through last week's lows. Now having blown lower, they've naturally recovered a bit. I'm not really expecting a very steep retracement here, so as I told the Diamonds room earlier, I thought "As I mentioned in the room last night, I entered a swing trade short on GU at 1.6440 with a SL at 1.6540 and TP at 1.6040. I do not expect to be stopped out." My best guess is as the European session gets rolling, we'll see yesterday's slight move up hit some downside pressure, especially on GBP/USD... but you never can be too sure. One reason to expect this is potential anticipation of UK CPI where the BoE may have given us heads up on some lower than expected numbers to come with their quarterly inflation report last week.
Gold, and Silver have now turned more comfortably to the downside. As you know, I've been long term bearish Gold and Silver since about the beginning of June through the subsequent ups and downs. Even though the properly anticipated bounce from their July lows went a bit higher than I expected, it looks like it's going to be much more down than up from here over the coming days, weeks, and months. I would see any further bounce on Gold (maybe to mid 940's) and Silver (maybe to 14.30 to 14.50) as good swing trade short opportunities as we should generally see lower highs and lower lows near term.
Stocks have finally validated my calls for a strong top soon and boy did they ever. With a clearly defined break of 992 coming right around the open of trading, we've confirmed that we're starting some form of significant downside. It's not quite too late to get in short since this is freshly confirmed, but it always helps to sell on bounces after a confirmation rather than chasing them and getting nervous. My targets are support at 968, then 957, then 930. If we somehow head much lower than 930 and the move is very impulsive, that will open up the possibility that the August 7th highs may be IT for this bear market rally from March. The odds still favor a rally from the low to mid 900's for one last attempt at new highs, but once we start testing trendlines below 900 on the S&P, those odds will start shifting dramatically towards another painful bear market. Long story short here... for the rest of the week, we're either getting a little more downside, or a lot, so look for shorts no matter what your timeframe. In news Tuesday we have 2 potential trades:
0430 UK CPI y/y (expected at 1.5%) - Based on last weeks inflation report, the GBP is quite sensitive to CPI issues, so any 0.2 surprise could get a strong reaction on GBP/USD. We may also see some GBP weakness in anticipation of the report as some may be leaning towards a low number. Whichever way the market moves before UK CPI, if there's a clear short term trend established, AND the news pushes the GBP even further in that direction, usually the news move will spike and reverse. If the news causes a short term trend reversal, then it's more likely to continue and extend over the course of 40 minutes to an hour.
If it comes out at 1.7% or higher, GBP/USD should rally 40-50+ pips.
If it comes out at 1.3% or lower, GBP/USD should sell off 40-50+ pips.
0500 German ZEW (expected at 45) - Lately, on decent surprises, the ZEW has been moving EUR/USD about 35 pips quickly, and then it seems all but forgotten after a retracement. While a I feel this indicator may start working better either this month, or sometime soon in future months, it's not a good idea to expect a huge resurgence to its glory days until we get at least one solid release as evidence.
If it comes out at 50 or higher, EUR/USD should rally 35 pips.
If it comes out at 40 or lower, EUR/USD should sell off 35 pips.
If it comes out at 35 or lower, EUR/USD should sell off in a more protracted manner.
0830 Various pieces of US news including PPI, Housing Starts and Building Permits - This news is likely to be a bit of a cluster**** and unless everything comes out in a clear direction (and maybe not even then), I'm not so sure it will be easily tradable. After Monday's scary equities selloff, most of the early NY action will be trying to get in front of the direction of the stock market open which will make fundamentals less important. We're skipping this news in the Diamonds room.
TRADE LIVE WITH SIR PIPS FOR $39.00 FOR 2 WEEKS
Sir Pipsalot has a live trading room, in which he trades these news reports. There, he shares his trades in real time, including exact entries and exits, and detailed explanation for every entry and exit. The service costs $299 per month, but we have a 14-days $39.00 trial. Go to Forex Diamonds and take advantage of this offer. This offer is for NEW customers only.
To our success,
Sir Pipsalot