Forex Trading Signal 05/19/09

Crazy Cat

Former FPA Special Consultant
Hey folks,

The markets had a major surge today that was a very strong jerk towards risk appetite, but the rally had little substantive cause other than some upgrades to the financial sector, and the developments that some banks will be paying back TARP funds early. There was also some hinting that BOJ might intervene to weaken the yen, but what else is new. Also, the equity rally was on very low volume, and stalled ahead of 912 resistance... My thinking is the most likely scenario is that we see a downside resumption across the board tomorrow in equities, XXX/JPY pairs and USD strength in accordance with the risk aversion trend carrying over from last week. I see Monday's strength as a very large head fake in a volatile market. Alternatively, we might see this up wave continue on for a few more days, hit some new highs across the boards, then start a more substantive decline. Personally, I'd like to hop in a bit short now as I feel downwards price action from around here (currently 1.3560 on the EUR/USD, 131.80 on EUR/JPY, 905-910 on S&P 500, etc.) starting tomorrow is the more likely scenario, and the risk versus reward is quite opportune. If we take out much more resistance to the upside, I'll probably stop out, look to flip long and take only short term trades for a bit. On the news front Tuesday:

0430 UK CPI y/y (headline 2.4% expected) - I think a 0.2% trigger should do well here especially if the core number agrees.
If it comes out at 2.6% or higher, GBP/USD should rally 40+ pips quickly
If it comes out at 2.2% or lower, GBP/USD should sell off 40+ pips quickly

0500 German ZEW Economic Sentiment (20.0 expected) - I think a 10 trigger should be safe enough to get a solid trade, but a smaller trigger could end up working also... it's just more risky.
If it comes out at 30 or higher, EUR/USD should gain 30-40 pips
If it comes out at 10 or lower, EUR/USD should fall 30-40 pips

0830 US Housing Starts (527K expected) - A smaller trigger might work here, but this indicator hasn't worked great on smaller surprises, so I'd only trade this if something big happens as follows:
If it comes out at 625K or higher, EUR/JPY should rally by 40-50 pips.
If it comes out at 465K or lower, EUR/JPY should fall by 40-50 pips.

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


The videos

Hi There Sir Pips,

Just writing to say I miss the videos, I have watched them for a long time and really do appreciate them, I would really like to keep seeing them.

I find the ideas you share re what the currency pairs are doing and the equity markets are doing very helpful.

Hope you can continue posting the videos


Bob Biryani

Sir Pips, I am a new subscriber and a relative newbie to Forex trading.
Just a quick question if I may - where/how do I find out what the outcome of a particular announcement is/was ?. I presume I need to be sat sitting in front of my PC to place the appropriate trade when it is announced, so I presume it needs to be a 'live' source. And , do they say it like you state above ? you know .. "UK CPY is 2.5%" or "ZEW is at 32.." etc. ?.

Many Thanks for any pointers you can provide.

Your humble peasant