Forex Trading Signal 9-22-2009

Sir Pipsalot

Former FPA Special Consultant
Hey folks,

As we were yesterday, we're still stuck in a short term pickle where things could go up, or they could go down. Fortunately though, we have some key levels to focus in on with a bit of a straddle-like focus. The EUR/USD looks like it may still end up rallying to new highs, but it's not set in stone. A sharp run up would start to target something around 1.4800 to 1.4870 near term and possibly higher. If the top is already in place, the first piece of confirmation will be a break of last Tuesday's 1.4560 lows. A further break below 1.4515 would be enough to shift my stance into aggressively bearish. Until then, I'm going to be cautiously bullish as there seems to be some decent risk appetite in the air coming out of Asia this morning. The EUR/GBP continues to be strong and the 0.9200 target still looks good. Gold and Silver are in the same boat as the EUR/USD. When we get a clear signal on the Euro, we'll have a good reason to look in the same direction on the precious metals.

The picture on stocks is pretty clear as well. Pretty much whatever happens Tuesday will likely see additional follow through from a technical standpoint. A push above Friday's highs at 1068 on the S&P would likely mean we're headed to the 1090 to 1100 area, and a break of Monday's lows around 1057 would mean there's a decent chance the highs are in place and a great shorting opportunity is at hand. Unless we stay stuck between those two levels, we should have some actionable information out of the stock market tomorrow, and it's likely to move in the same direction as the Euro. In news Tuesday:

0830 CAD Retail Sales headline m/m (0.7% expected) - Typically the USD/CAD will react with a 25-35 pip move initially, followed by a period of consolidation for 30 minutes or so, then a continuation for 50 pips from prerelease or more. While that continuation move isn't guaranteed, we have seen it the last 3 times in a row, so getting in early during that consolidation period on some measure of a pullback seems like a good strategy.
If it comes out at 1.2% or higher, USD/CAD should fall 25-35 pips initially, then 50+ pips in the following 1-2 hours.
If it comes out at 0.1% or lower, USD/CAD should rally 25-35 pips initially, then 50+ pips in the following 1-2 hours.

1845 NZD GDP q/q (-0.2% expected) - On a decent enough surprise, this one should be good for 30-50 pips initially. Like with CAD Retail Sales, if it consolidates or retraces after a decent spike move, usually getting in after a 50% retracement makes for a good swing trade.
If it comes out at 0.0% or higher, NZD/USD should rally 30-50 pips.
If it comes out at -0.4% or lower, NZD/USD should fall 30-50 pips.

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To our success,
Sir Pipsalot


Final nail on the coffin

Looks like EUR/USD will try to break 1.4870 H4 trendline tomorrow. Afterwards the first serious bad news will initialize the pulldown.