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Sir Pipsalot's Daily Market Update 1-15-2010

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, Jan 14, 2010.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    Hey folks,

    Here's a copy/paste of the current EUR/USD status I have up on our Profit Mongers site:

    To recap recent analysis, from a daily chart perspective, the typical retracement zone once a trend is established is 38%-50% which is 1.4568 - 1.4676. This was the ideal area for us to look for a position trade short.

    My strategy was to plan for a PTS position trade short on EUR/USD by either waiting for a better price around/above 1.4568, or getting in after fairly clear confirmation that the downside trend has resumed. Well, we got that retracement and ran into a wall around 1.4580, so we entered that position trade short and it looks good. If it works, this trade should be good for at least 500 pips and potentially up to 1500 pips.

    Upside resistance to be seen at 1.4570, 1.4625 and the 1.4670-80 region. Downside there's a key level right around 1.4460 that will either hold things up or cause some accelleration downwards if cleanly broken.

    ***Update, we made it through the 1.4460 key level cleanly, so now we should see further downside into the 1.4300's near term. If we get a small rally back up to the 1.4450-60 area that starts to top out, it would make for a good swing trade short from there. Near term support may come into play at the 61% and 78% fibs of the recent upswing at 1.4384 and 1.4339, so those are good areas to either put some TP's or even strategically scalp long.

    If EUR/GBP manages to break through 0.8830, that will likely force EUR/USD into an even more dramatic selloff.

    I haven't been commenting much on stocks recently because I don't see anything particularly clear there. The market feels very manipulated and wound up tight, so I'm waiting for a nice spark and signs of sustainable momentum before I look to trade a lot in equities. I do feel though that the New Year rally has fizzled a bit and I have a downwards bias for the next 1-2 weeks.

    In news Thursday, ECB interest rates came out as expected, but US Retail Sales came out just low enough to hit our sell triggers and produced a 50-60 pip selloff on USD/JPY that took 25-30 minutes to develop and eventually bottomed out about 90 pips below prerelease later in the NY afternoon. I had though the USD/JPY wouldn't get that much follow-through, so it was definitely good to see. Trichet's speech was going on at the same time, so EUR/USD gains were fairly limited on the news. In fact, seeing noteworthy Euro relative weakness during a fairly vanilla Trichet speech just gave further fundamental/sentiment confirmation that the market collectively is looking to sell EUR/USD. Typically when there is pent up selling pressure, the market will interpret mixed news as bearish, so I found today's price action very encouraging for our shorts there. In news Friday:

    0830 US Core CPI m/m (0.1% expected) - This is CPI Ex Food & Energy which is usually the more important CPI release. Expectations range mainly from 0.0% to 0.2% with one rogue economist looking for 0.3%. Honestly we haven't gotten a clear move out of a CPI release in quite some time, and inflation really isn't on the economic radar right now, so I'm choosing to play this safe and look for a 0.2% deviation instead of the usual 0.1%.
    --If it comes out at 0.3% or higher, USD/JPY should rally 30-40 pips.
    --If it comes out at -0.1% or lower, USD/JPY should fall 30-40 pips.
    Also look out for the Empire Manufacturing number (12.0 expected) at the same time. If it comes out higher than 25 that would help strengthen USD and lower than 0 would weaken it.

    0915 US Industrial Production m/m (0.6% expected) - This indicator has been pretty much ignored by the markets over the last several months, so I wouldn't expect much here.

    0955 US University of Michigan Consumer Confidence prelim (74.0 expected) - This indicator is somewhat of a dice roll. Sometimes it makes for a substantial, gradual move, and other times it's just ignored. If you're around for it and it hits the triggers, it may be worth a trade on USD/JPY if you can hold it for up to an hour and get in with a reasonable SL... just don't put too much into play on it in case it's a dud.
    If it comes out at 79 or higher, USD/JPY should strengthen
    If it comes out at 69 or lower, USD/JPY should weaken

    That's all for today's update. If you'd like to learn more about trading or trade along with myself and my collegues, come join us at Profit Mongers. Our subscription is very reasonable at $179 per month, and right now you can sign up for a 2 week trial to get started for only $29. This offer is for new customers only.

    To our success!
    Sir Pipsalot
     
  2. mechtech63

    mechtech63 Corporal

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    Well, it was nice to close the week with some profit. Got in late, but still pulled out 53 pips. Ready for next week. Can't wait.

    Good job Sir Pips.
     
    #2 mechtech63, Jan 15, 2010
    Last edited: Jan 17, 2010

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