Forex Trading Signal 9-2-2009

Sir Pipsalot

Former FPA Special Consultant
Hey folks,

Well, it looks like stocks have cooperated very well with our sell, and whether you got in short a bit on the early side when I did sometime Monday, or got in short with the more solid confirmation on Tuesday, the long term stock sell signal is now fully confirmed with the clean break of 1015, and I feel pretty confident that we're starting a more major selloff. That said, we've now traced out 5 small degree waves to the downside, so we're likely to trade sideways or retrace a bit in a 3 wave retracement for 1-2 days, so feel free to use that as an opportunity to sell a rally if it develops. I'd say a rally back up to the 1010-1020 range is a perfect place to get short if you're not in already, although a rally back up there is not a completely sure bet since Tuesday's selloff could always extend a bit lower before consolidating/bouncing. Given the type of confirmation we've seen, I'm going to go out on a limb and say that the odds are a solid 70% that US Equities have set their highs for the year (S&P 1039 highs... currently near 1000), and we've started a more major long term selloff leg. In case you haven't been keeping up with the signals I've been putting out, check up on the weekly signal, but again... my target right now is 400 on the S&P.

Now, back to currencies... yesterday I said "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 patience and diligence has proven fruitful and now that stocks have confirmed a more major turn, that gives the EUR/USD and GBP/USD a lot more fuel to complete their turns into a downtrend that started back in early August when I called those trades here. Like stocks though, their short term declines may hit a bit of a speedbump and some consolidation or short term bounciness may occur. Similar to stocks, I like the idea of a swing trade sell at higher prices on the EUR/USD around 1.4300 with a 50-100 pip SL. The idea on EU and GU now is to get short on good bounces to get in line with the larger trend.

Silver and gold are still holding up decently well, but as stocks start rolling over further, and the USD picks up even more steam, the metals will see some extensive downside. The key levels from the weekly signal remain unchanged and both are great sells at their current levels.

In news Tuesday, we saw a lot of positive news just get slammed... from German Retail Sales, to US ISM and Pending Home Sales... good news could only manage a meager spike up and subsequently got hammered on a reversal down. Fortunately, given the low liquidity right now, I kind of saw this potential coming and recommended skipping these trades. The one I did want to trade, AU GDP actually did pretty decent all things considered and managed 44 pips up over 25 minutes after hitting our buy trigger. In news Wednesday:

0815 US ADP Employment Change (-250K expected) - This one is usually good for a modest move on USD/JPY, and if the surprise is very large, it could get a bit of a short term trend going.
If it comes out at -100K or higher, USD/JPY should rally 40-50 pips
If it comes out at -180K or higher, USD/JPY should rally 30 pips
If it comes out at -320K or lower, USD/JPY should fall 30 pips
If it comes otu at -400K or lower, USD/JPY should fall 40-50 pips

1400 US FOMC Minutes - Not much we can forecast here from an economic number standpoint, but obviously the market will be looking for insight into the FOMC's thinking and rationale in terms of when they're going to unwind their special programs, and why they slowed their rate of Treasury purchases. If there's some clear desire present to move forward (albeit slowly) with their exit strategy, and their slowing of Treasury purchases is a first step in that direction, it would be a USD positive.

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
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I just want to say thank you for your is working and still working though i am new here, one's again thanks and looking forward for more thread and more light on how to subscribe.