Forex Trading Signal 06/25/09

Crazy Cat

Former FPA Special Consultant
Hey folks,

What a day with the SNB intervention, eh? Made for a wild ride on quite a few pairs this morning. Essentially, the SNB has made it clear they are going to defend the 1.5000 level as a line in the sand on EUR/CHF. Our plan to sell Tuesday's rally on the EUR/USD paid off nicely as we sold off from around 1.4100 to 1.3900 in the post FOMC lows. I'd say as long as Wednesday's highs hold, any other decent rally attempts should be shorted on EUR/USD and any position trades short should be fine. The FOMC Statement today wasn't groundbreaking, but the fact that they did not expand their quantitative easing in any way was USD strengthening, and in my opinion, their statement was a bit more pessimistic than the market was looking for. Based on this, we managed to nab 40+ pips on a scalp, but I don't think there was a big enough surprise on the statement to warrant any modifications to our long term view. Stocks may float up a bit above Wednesday's highs, but as long as they don't surge through 917, the short side should be rewarding. No change on our long term gold outlook... look for lower prices over time. We're looking for stronger USD for sure, but in recent markets, it's been better to short pairs like EU and GU on big bounces for medium to long term trades, and chasing quick momentum is really only ok for scalps. Also, if EUR/CHF works back down to the 1.5000-1.5100 range again, it could be worth a nice buy as more intervention or the anticipation of intervention steps in to send it upwards. For news Thursday:

0830 US GDP 1Q Final Annualized (-5.7% expected) - Usually the final revision to GDP is the least important and deemed less significant by the markets; however, it is still a GDP release, and it should have an impact if there's a big surprise. Since this is a final revision, we'll need a decent 0.5% deviation to make it reliably worth trading. The likelihood of hitting that trigger is somewhat small historically, but it's possible given all the unusual complexity to the data from the first quarter.
If it comes out at -5.2% or higher, EUR/JPY should rally 50 pips.
If it comes out at -6.2% or lower, EUR/JPY shoudl sell off 50 pips.

1845 NZ GDP q/q (-0.7% expected) - This should be an ok trade as long as it hits a 0.3% deviation. If we get a smaller 0.2% away from expectations, it might be ok if the y/y (expected at -2.3%) difference is decent also, but it's not quite as reliable.
If it comes out at -0.4% or higher, NZD/USD should rally 30-40 pips.
If it comes out at -1.0% or lower, NZD/USD shold sell off 30-40 pips.

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To our success,
Sir Pipsalot