Forex Trading Signal 9-1-2009

Sir Pipsalot

Former FPA Special Consultant
Hey folks,

We're still a bit in limbo as the markets decide whether they want to sell off from here, or whether we're going to get one more nice September run up to new highs before the big long term selloff commences. The EUR/USD remains somewhat on the edge here where much more strength will turn things short term bullish, but recent advances have been anemic enough to make it look more like topping action than a rally in the works. Usually things look tough before a turn though, so we'll continue to maintain our short bias and position trade short on EUR/USD as long as 1.4450 stays intact.

Our short bias on Gold and Silver are similarly "on the edge" where we're getting closer and closer to those $971 and $15.22 key biasing levels. If we trade through those levels we're going to have to turn at least short term neutral and fully reassess the odds there.

On stocks, we traded right down to that 1016 support region I identified as key biasing support and traded through it by a point or two several times, but even on the 15 minute chart, everything below 1016 is a wick. I got a bit suckered into it at the open as a break out and have initiated a position trade short with some put options, but I feel the confirmation really isn't quite there yet, so I recommend holding back for now and taking a wait and see approach. I still feel the odds slightly favor a selloff with the highs already in place, but any rallies above 1031 to test those highs will tilt the odds more towards a final September run to new highs taking place before the big major turn lower. If we get that type of rally, I will probably take a loss and trim down my puts so I can re-enter at potentially higher prices, but since I bought them for March expiration and I have plenty of time, I'll probably just close half.

In news Monday, we saw Chinese Manufacturing PMI come out better than last month at 54.0 barely hitting my buy level, and AUD/JPY gained about 30 pips. Australian Interest Rates came out as expected at 3.00%, but their statement was less hawkish than anticipated, so the AUD/USD sold off by about 40 pips. In news Tuesday:

1000 US Pending Home Sales (1.6% expected) and ISM Manufacturing (50.5 expected) - Pending home sales should dominate the price action here if it posts a surprise, most notably on USD/JPY. With the high potential for conflict though, you may want to consider focusing on other trading opportunities. I'm choosing to skip this one in the Diamonds room, but it could be a decent one for spike traders.
If PHS comes out at 5.00% or higher, USD/JPY should rally 30-40 pips.
If PHS comes out at -1.00% or lower, USD/JPY should fall 30-40 pips.

2130 AU GDP q/q (0.3% expected) - Despite a less hawkish statement than expected, most of the RBA's commentary on growth was quite positive. This will likely lead the market to anticipate a better than expected GDP release since it's assumed the RBA had early access to the GDP data before writing their statement. Their Treasurer Swan even said he "hopes" GDP figures are positive tomorrow. Under these circumstances, I think ahead of the release in the early asian session we're likely to see AUD relative strength. I also think it's prudent to slightly tilt our triggers to account for the likely higher expectations.
If it comes out at 0.6% or higher, AUD/USD should rally 40 pips.
If it comes otu at 0.1% or lower, AUD/USD should fall 40+ 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