Sir Pipsalot's Daily Market Update 1-19-2010

Hey guys,

Monday was a very quiet day with a lot of stop hunting and false breakouts on low volume. I'm expecting a bit more of a return to normal here Tuesday. The Euro has continued to retain relative weakness, but the EUR/USD has taken a break from it's slide and is consolidating. I still recommend trying a short from 1.4420 or 1.4450-60 if a rally seems to run into some orders there. Chances are we'll head into the 1.4200's this week on a mixture of negative fundamentals and technicals on EUR/USD, so shorting rallies at resistance seems like the ideal trade. There's support at recent lows at 1.4338, and at various levels in the 1.4200's including 1.4263 and 1.4217, the recent 4h low, and the low from December.

In stocks, I feel there is a very good trade opportunity brewing, so I put out this research note earlier last night:
"I am recommending shorts on stocks on all timeframes. A rare but very accurate confluence of Elliott Wave patterns are calling for the major stock market top here, or VERY close by. I don't see the turn quite fully confirmed yet (we need 1127 to break for starters), but the evidence has piled up enough to think about trying to get in a bit early. The ESH0 contract is now at 1135-1138. Scalpers can try to get away with a 7 point SL while swing traders should give it 15-20 points of room. From a position trading standpoint, I'd mentally budget for 50 points of room but I wouldn't worry about a hard stop and we'd probably get out before it goes nearly that far. We very well could be setting the highs for the year with a very steep selloff brewing shortly. "

Gold and Silver may be setting up for a long term short as well, but I'd like to do a bit more research into it before discussing it here.

In news Tuesday:

0430 UK CPI y/y (2.6% expected) - We should see a 40-50 pip move on GBP/USD if we get a surprise of 0.2% or better. Any conflict with the Core numbers would make it a good idea to stay out. Oftentimes on CPI, the move will have a lot of head-fakes along the way, but eventually make the target within the 15-30 minutes.
If it comes out at 2.8% or higher, GBP/USD should rally 40-50 pips
If it comes out at 2.4% or lower, GBP/USD should fall 40-50 pips.

0500 German ZEW Economic Sentiment - I don't trade this one very much anymore as it's been more trouble than it's worth. If it breaks it's bad streak I'll let you know tomorrow, but I won't be trading it live.

0900 CAD Interest Rates (no change at 0.25% expected) - There's very little chance we'll see a surprise hike as they have essentially told everyone rates will stay here through June of 2010, but there could be a sharp USD/CAD reaction if they start to accellerate or delay their timeline for raising rates.
If they hike, USD/CAD will fall 80+ pips
If they cut somehow, USD/CAD will rally 80+ pips
If they push back their timeframe for raising rates to later than June 2010, USD/CAD will rally 30-40 pips or possibly more
If they push forward their timeframe for raising rates to earlier than June 2010, USD/CAD will drop 30-40 pips or possibly more

1645 NZ CPI q/q (0.0% expected) - This isn't the best opportunity, but usually the 30-40 pip move on a good surprise is worth a look.
If it comes out at 0.2% or higher, NZD/USD should rally 30-40 pips.
If it comes out at -0.2% or lower, NZD/USD should fall 30-40 pips.

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

 

Sir Pips,

Thanks for the info on the EUR/USD pair.

I plan on trading these news events, gonna be up past 1:30am PST to get that first one. Wish I would have skipped that beer a little while ago...

Happy trading.