Sir Pipsalot's Daily Market Update 12-30-2009

[Sir Pipsalot]

Hey folks,

The EUR/USD did indeed break the 1.4420 resistance and continued a bit higher during the Euro session, only to turn around into a deeper selloff during NY. My best interpretation of the price action is that last night completed a wave A up of an A-B-C retracement ov the December downtrend. We are now in wave B down that could bounce soon (around 1.4309) but could dip lower even exceeding last week's 1.4217 low by a bit. After wave B ends, a wave C higher should take us above today's 1.4458 highs and at least to 1.4568 (38% retrace of downmove).

Keep in mind though that wave counts can be in error and we could always have some sort of alternate wave count develop that doesn't seem terribly obvious right now, but the contrast between clear impulsive and corrective characteristics within the structure make this interpretation an overwhelming favorite in my view.

I've attached a couple of charts to display what I'm talking about. I apologize for the crude MS Paint work, but I'm a trader, not a Graphics Deisgner =P

3 hour chart with likely medium term trend for the next 1-3 weeks:

15 minute chart showing examples of bullish and bearish trend reversals:

My plan is to buy on the next bullish trend reversal on the 15 minute chart (it has been working best the last week or two). I personally define a 15 minute bullish reversal as when price is holding above the 10 and 20 EMA's and those EMA's are sloping up and above the 60 SMA. There are more intricate ways of identifying trend reversal, but this is simple and will work for me in this case. Once we reverse higher on the 15m, I plan to buy EUR/USD and put an SL below the recent swing lows looking for sensible profits, but holding out on a bit of the position for around 1.4568.


In stocks, it seems like S&P 500 futures have lost some of their momentum and it's quite likely we'll either range trade or ease lower into the new year. I would look to either sell after a 3-7 point pullback up or cautiously chase it short with a comfortable SL.

In news Tuesday, we saw US Consumer Confidence figures come out very close to expectations, so there was nothing to really work with there. There are no more key news trades this week unfortuantely, so trading volume is likely to be low. Keep your ear to the ground and your eyes on the technicals for indications of big stale orders at certain key levels as the reduced volume will likely have more trouble breaking confirmed support or resistance backed by decent sized orders. As I type this right now for example at 2230 EST, it seems pretty obvious there are bigger orders at the major EUR/USD bounce retracement fibs at 1.4365, 1.4337, 1.4309, and likely 1.4273.

I hope everyone had a wonderful Christmas and enjoys a happy New Year!

That's all for today's update. If you'd like to learn more about trading or trade along with myself and my collegues, come join us at Profit Mongers. Our subscription is very reasonable at $179 per month, and right now you can sign up for a 2 week trial to get started for only $29. This offer is for new customers only.

To our success!
Sir Pipsalot

 

[ADEGBUYI]

thanks you for the information

i dont know why i still fall a victim,i cant place trade without your opinion you rely make my trading realistic and profitable.i count on you by 2010.thank you a lot .i m proud of you.sir pips.Ican not forget mr john from ijesha ,you remain my great mentor . regard ADEGBUYI.

 

[cosmopolit]

Thank you for sharing your view on the market.

Hope you will continue your mission next year.

 

[Forexwatchman]

In news Tuesday, we saw US Consumer Confidence figures come out very close to expectations, so there was nothing to really work with there. There are no more key news trades this week unfortuantely, so trading volume is likely to be low. Keep your ear to the ground and your eyes on the technicals for indications of big stale orders at certain key levels as the reduced volume will likely have more trouble breaking confirmed support or resistance backed by decent sized orders. As I type this right now for example at 2230 EST, it seems pretty obvious there are bigger orders at the major EUR/USD bounce retracement fibs at 1.4365, 1.4337, 1.4309, and likely 1.4273.


Sir Pipsalot

Not sure what you mean by there are no more key news trades since there's the Chicago PMI that I'm getting ready to trade in just a few minutes and then tomorrow there's the US Unemployment Claims. Also in the news Tuesday the Consumer Confidence Survey did come out .1 off of the expected number, which was great since it's a 3 month high and shows the US economy is continuing to strengthen! And it moved the EUR/USD over 95 pips an hour after the release making me a richer person yesterday! The EUR/USD was also at the tail end of a retracement back up from the steep downtrend that's its been in for the past month. So I'm confused by where you are coming from with your analysis.

Anyway, I obviously respect your opinions on the market, read them almost everyday, and I hope you keep up the good work.

UPDATE: Chicago PMI comes out 60, over and above the expected 55, and this is also the highest it's been since Jan. 06. SELL SELL SELL EUR/USD

 

[Sir Pipsalot]

The EUR/USD was also at the tail end of a retracement back up from the steep downtrend that's its been in for the past month. So I'm confused by where you are coming from with your analysis.

Anyway, I obviously respect your opinions on the market, read them almost everyday, and I hope you keep up the good work.

Well, most retracements after an extended move like we've seen tend to at least retrace 38% of the prior move and do so in 3 waves. I am VERY bearish long term EUR/USD, but because we're likely still working out this retracement period, chances are the best opportunities are long for the next week or so. We actually pulled down to the 78% at 1.4273 that I mentioned and bounced right off of it. It looks like the Euro was set to recover earlier, but some surprising good news on housing out of the UK at 6am EST pushed the EUR/GBP into a steady downmove limiting EUR/USD upside.

Also in the news Tuesday the Consumer Confidence Survey did come out .1 off of the expected number, which was great since it's a 3 month high and shows the US economy is continuing to strengthen! And it moved the EUR/USD over 95 pips an hour after the release making me a richer person yesterday!

Well, 0.1% off from expectations is not enough to move the market on this indicator. I'm glad you made money though. When things come out close to expectations, more often than not the short term trend continues. The EUR/USD was had downwards momentum for 1-2 hours heading into the news, the news did not affect that and the momentum continued after.

Not sure what you mean by there are no more key news trades since there's the Chicago PMI that I'm getting ready to trade in just a few minutes and then tomorrow there's the US Unemployment Claims.

UPDATE: Chicago PMI comes out 60, over and above the expected 55, and this is also the highest it's been since Jan. 06. SELL SELL SELL EUR/USD

Chicago PMI is sometimes tradable, but even with today's positive numbers, the USD failed to strenthen much at all. The EUR/USD was at 1.4299 and range traded moving as high as 1.4317 50 minutes later before making a small push lower to the 78% retrace of last week's upmove. Essentially, even with the better than expected PMI numbers, I don't think we saw a market reaction. We are getting Unemployment Claims tomorrow, but it's a weekly report that is kind of hit or miss, and it's coming out on New Year's Eve so methinks it more likely to miss. I only rarely trade weekly unemployment claims.

 

[Forexwatchman]

Well thanks to the extremely low volatility and liquidity, the market is a mess. The Chicago news did cause an ever so slight 30 pip move within the hour of its release, and then a bomb scare in NYC and the KC Fed Index falls to 10 in Dec from 17 and the EUR/USD shoots back up again closing any hopes of a short. It's just too thin out there to trade anymore this week, so I'm closing up shop as well. Look forward to next week's analysis.

 

[lilies]

just logging in to thank Sir Pips for your input. I, like many others in this forum read your thread faithfully. Wishing you and your family a very bright, very happy 2010! Cheers!