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Sir Pipsalot's Friday Market Update 08-27-2010

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, Aug 27, 2010.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    Hey folks,

    EUR/USD's status is a bit indeterminate for me right now. I see multiple possibilities and conflicting near term outlooks, so I'm choosing to refrain from any bold calls today. I still plan to get short on EUR/USD long term when it seems like a corrective rally is topping, and that may even be the case now, but the picture just doesn't look particularly clear to me right now.

    One reason the EUR/USD picture seems a bit muddy to me is the setup on the EUR/GBP. Right now EUR/GBP seems poised for a nice 40-90 pip breakout higher, potentially leading to more of a substantial rally over the course of days or weeks. Because of this, I'm going long here in the 0.8160 to 0.8210 range (now 0.8195) with a SL around 0.8120. I plan to take partial profits around 0.8280 and final TP around 0.8600.

    Stocks are still working downwards, but will likely find a short term low here in the 1030's. I plan to personally just hold short through any corrective pattern, but as clear shorter term buy and sell points emerge, I'll let you know. For now, 1070-1080 is the ideal selling range on S&P 500 futures, and while a buy in the 1030-1040 range may work out, I don't like the long side just yet.

    In news Thursday, we saw US Jobless data come in a bit better than expected, but missing our triggers. Still, USD/JPY managed a 25 pip rally and S&P500 futures managed a 5 point rally that held on for about 5 minutes. Reassuring despite the missed trigger. In news Friday:

    0430 UK GDP q/q Revised (1.1% expected) - Unfortunately, this 2nd release of UK GDP has an annoying habit of rarely surprising economists. Nevertheless, if it makes an exception today, we should see a good reaction on GBP. Make sure the y/y number (1.6% expected) deviates in the same direction as well to confirm the trade.
    If it comes out at 1.3% or higher, GBP/USD should rally 40 pips.
    If it comes out at 0.9% or lower, GBP/USD should fall 40 pips.

    0830 US GDP Annualized 2nd revision (1.4% expected) - Unfortunately, a modest trigger usually isn't enough to get things moving on the 2nd revision of GDP, so we'll have to look for a slightly larger trigger to ensure a move, especially since traders may be more focused on the speech 90 minutes later.
    If it comes out at 2.0% or higher, USD/JPY should rally 35 pips.
    If it comes out at 0.8% or lower, USD/JPY should fall 35 pips.

    1000 Bernanke Speech at Jackson Hole (market wondering if there will be some new announcement) - The street is buzzing with anticipation for this speech to deliver some sort of new program, with some thinking a new phase of Quanitative Easing could be announced. It's far from expected, but most pundits are still publicly pondering "what-if?"

    --If some new expansionary announcement is made, that would be a big buy for EUR/USD for at least 40-50 pips and perhaps more based on the scope of the program. Stocks should also mount a nice 1% rally or perhaps more over the course of 10-20 minutes.

    --If the speech disappoints and nothing really new or shockingly dovish is said, the speculators will probably rush to cover their USD shorts and EUR/USD should have a nice short term selloff good for 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
     

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