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Sir Pipsalot's Daily Market Update 1-29-2010

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, Jan 29, 2010.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    Hey folks,

    EUR/USD did indeed extend it's decline today as forecasted in yesterday's signal. The question now is, how far will it go? The next big level of key significance is 1.3800, and I think that's the likely target for this move; however, being in a profitable short means taking some money off the table so you still make money even if you're wrong. In trading it's not about being right more often than wrong, it's about making more money when you're right and losing less when you're wrong. Anyways, we took half profits at 1.3943 and I would not stay short EUR/USD if we rally through the 50 SMA on the hourly chart (now around 1.4000). Such a rally would help signify that a more significant bottom on EUR/USD may be in place ahead of 1.3800 and we're due for that period of consolidation/retracement that we have coming.

    One other thing to note is the bit of a game changer we got from the GBP. Today S&P essentially downgraded their outlook on the UK banking sector and it may be enough to reverse GBP sentiment relative to the Euro. Until today, the Euro has been consistently losing more ground due the confidence and debt problems in it's fringe states (such as Portugal and Greece). That move has been substantial, but now with a reason to worry about the UK, we may see a whipsaw back up on the EUR/GBP. I think the risk/reward and fundamentals warrant a shot at a long around here (0.8645 as I type) with an SL a bit below 0.8600 and a final TP around 0.8790. I don't think this is enough to reverse the trend on EUR/GBP, but I think it's enough to give it a nice bounce on the 4h chart similar to or a bit bigger than what we saw late last week.

    On stocks, we have broken some pretty major support and a very obvious trendline that I feel has been somewhat over-analyzed by technical analysts. When all the pundits are eyeing a big trendline or technical pattern, usually things get funny around there. So I'm not quite ready to just trust this breakout and chase things short just yet. My call to short the S&P futures around 1104.50 yesterday missed filling by just a point or two which was unfortunate, but it happens. Despite the trendline break, my gut is telling me there's stronger odds of an impending retracement than most people are giving it credit for at the very least. Anyhow, I remain only modestly short (old position trade I plan to hold for some time) and continue to await another retracement to get back in short more aggressively. Right now I would move my selling levels down to 1000 and 1109.

    In news Friday, we have one big item:

    0830 US GDP Annualized Advance (4.7% expected) - This GDP release is bound to attract a circus of coverage, which may actually make the trading more difficult. With so many polarized expectations heading into it, it's a bit hard to say which side has more money. Forecasts are spread their widest since April of 2009 (just a month after the market lows) from 3.00 to 7.50%. Because of this, I think a wider trigger than usual may be necessary to avoid getting caught.
    If it comes out at 5.3% or higher, USD/JPY should rally 50+ pips.
    If it comes out at 4.1% or lower, USD/JPY should fall 50+ pips.

    We're also getting US Chicago PMI at 0942, but I don't think it will be a major concern today.

    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. If you have any questions, you can also email me at sirpipsalot@profitmongers.com

    To our success!
    Sir Pipsalot
     
  2. yax

    yax Recruit

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    Major Pips

    Thanks a lot, am in on EUR/GBP.
    I will soon join you at profit mongers.:nerd:
     

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