Sir Pipsalot's Friday Market Update 04-30-2010

Hey folks,

I continue to have a wait and see approach to EUR/USD. It will take a break of 1.3000 to the downside to convince me the bounce is over, while a break up through 1.3425 is strong evidence we'll see a rally to around 1.3800 (where it will become an excellent short). So for now, it's just about chasing smaller short term trades around while we churn in consolidation in this 1.3000-1.3300 range. However, I do think the shorter term odds are somewhat tipped towards a further retracement higher on the Euro which fits into my trade recommendation below.

One opportunity I do see is a long on EUR/GBP. Right now we're at 0.8632 which is right around repeated support for the day, and the lows of the week, and just 30 pips above the January and April lows. Fundamentally, of course the Euro is pretty doomed... but just about everyone's already in on it and even the layman is talking about Greece's problems right now. Usually when the conventional media and non-financial people start talking about something, that means it's oversold and it reverses in profit taking mode for awhile. So right now, I'm taking a long here on EUR/GBP with a 40-50 pip SL looking for 50 pips higher to start, then final TP at 100 pips.

One thing to keep an eye on on USD/JPY is the 95 handle as well. On the daily chart it's been an excellent pivot point which essentially means, we could get close or hit it and top out, or... if we make it through definitively, we should have a good amount more strength on follow through. Over the last year we've pushed through 95.00 definitively 6 times back and forth, and when we did for 100, 150, 280, 350, 500, and 700 pips. That's an average of 346 pips with at least 100 each time. Just look for a clean breakout high to spark a good momentum trade long.

On stocks today, the gamblish trade from yesterday got a bit tricky with a rally up near the SL depending on your entry. Assuming you're still in, just keep the SL slightly above today's highs and give it room to work lower tomorrow. If we don't head lower Friday or Monday at the latest, the odds shift too strongly towards continued rally, but for now, the odds are strong for the short.

In news Friday:

0830 US GDP 1Q Annualized Advance (3.3% expected) - I've also seen expectations of 3.4 and 3.5% floating around, but 3.3% is the bloomberg median estimate which is the industry standard expected value. Because of the disparity though, I will look for an extra 0.1% for a long than a short.
If it comes out at 3.9% or higher, USD/JPY should rally 40-50 pips.
If it comes out at 2.8% or lower, USD/JPY should fall 40-50 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. If you have any questions, you can also email me at sirpipsalot@profitmongers.com

To our success!
Sir Pipsalot

 

Its been a few good hours and the market is going in your initial prediction. Im thinking that the news on Sunday about the Euro is going to help push it back up to the 1.38 or more area... If it does go back up that far, the beers are on me.

Cheers

 

eur/gbp

Super call sir pips...how much follow thru do you think this trade will have next week, I read that usually the last day of the week the uk sends money to the eurozone, so this might have helped this trade.

 

I think there's only a maybe a 60-40 chance we bust out of the 4hr chart range on EUR/GBP higher through those 0.8733 highs, that's why I had my TP a bit below there. I'd wait for another dip to get back in long in case this just stays rangebound awhile... at least down to 0.8650-70 before I'd think about buying again.