Sir Pipsalot's Daily Market Update 11-10-2009

Sir Pipsalot

Former FPA Special Consultant
Hey folks,

Outlook Summary:
Roughly the same for EUR/USD, GBP/USD, Gold, Silver & Stocks:
Longer term: SHORT with entry opportunities now.
Shorter term: Short on bounces.

Well, the market had quite the short squeeze yesterday and it looks to be over. Tuesday's action is now the pivotal signal as to whether we're topping out as predicted, or we've worked back into the old uptrend. The odds still favors the short side and the risk/reward very heavily favors the short side at the moment... so much so that shorting the Euro here (around 1.4970-80) makes sense for a position trade if you're not already short. Also a short on GBP/USD around 1.6700 is also good risk/reward with a 50-80 pip SL.

Gold and Silver look to have topped around 1110 and 17.80 respectively. Silver in particular is worth shorting around here ($17.35) with a SL just above the highs. As with the GU and EU trades, the odds are only slightly over 50%, but the potential reward if we're right far exceeds the risk.

Stocks were wickedly strong today pushing into the 1090 region that is essentially the furthest I feel comfortable with. Again, one more day on Tuesday should give me enough information to decide whether to continue holding short long term, or to bail and potentially flip long. As with the other markets, a short here presents great R/R but the odds are probably under 50% here.

In news Tuesday:
0500 German ZEW Economic Sentiment - This number hasn't been a huge mover lately, and when it is big, it's been leaking somewhat often, so I don't plan to trade this one even though it's important for the Euro.

2100 Chinese Industrial Production (15.5% expected) - China is also releasing retail sales, and inflation figures. Typically Chinese numbers have a strong effect on broad risk appetite or risk aversion which is most clearly seen on a pair like AUD/JPY since it is a yen cross and AU is a big trading partner.

If it comes out at 16% or higher, and the other numbers don't conflict, AUD/JPY should exhibit strength and be good for a swing trade long for 1-3 hours.

If it comes out at 14.9% or lower and the other numbers don't conflict, AUD/JPY should exhibit weakness and be good for a swing trade short for 1-3 hours.

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
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An excellent observation. I was thinking about trading on the ZEW, but I agree it's to weird to trust. I'm up 50 pips today and I'll just be happy. :D