Sir Pipsalot's Monday Market Update 05-17-2010

Sir Pipsalot

Former FPA Special Consultant
Hey guys,

Last week was a pretty stellar week with these daily signals, as we were pretty much all over many of the major moves and trend directions. Now though, things are getting a bit tougher to hone in on now that EUR/USD has fulfilled my forecast and broken the 1.2400's. Now it's in a potential support region in 1.2100-1.2330 range I cited last Thursday/Friday, but it also has brought a lot of heavy negative momentum to bear as well. So the odds are somewhat split between a continuation and a medium term bounce from this region. When that happens, it's a good idea to take some profits if you're in a long term short, and set your SL at an intelligent spot based on where you got in. For new trades, it's usually best to look at the 15 min chart and hourly chart for momentum trades (15m has been zooming awhile, so it might make more of an 1h chart pullback).

By momentum trades, usually I recommend selling on a pullback to the 10ema on that chart, with a reasonable SL at least above the 20 ema, and a reasonable TP. You can also keep a small portion of the position on and build up a position over time if the trade keeps trending down. Typically I find this works best on the 15min chart during fast momentum; however, once the 15min chart has been working for several sessions (as it has been the last 18 hours), usually there's some at least slightly stronger retracement or consolidation that creates more of an hourly chart pullback to the 10 or 20 ema.

As far as a more opportune sell on a stronger pullback, it's hard to zero in on without a low established yet. Right now I'd be looking at 1.2510-1.2565 for a medium to longterm pullback short, but that target area might move around somewhat based on where EUR/USD bottoms out for the day/week. More on this if/when a more clear bottom develops.

On USD/JPY, we've seen some decent losses in tandem with the equity market weakness out there. If you're still in short from above 93.00 last week based on my recommendation, again, I'm looking for 100, 200, and 600 pips each for my TP's. As stocks work lower to test Friday May 6th's phantom spike down, so will USD/JPY in all likelihood, and that means over 300 pips lower from here and probably more unless we find some major risk appetite this week.

Stocks were called pretty much perfectly last week. Early in the week I cited the best area to sell was the 1154-1174 range and we rallied into that range several times throughout the week and each time it sold off lower; in fact, the high for the week on futures was 1174.75, so anyone who wanted to get short in that range should have gotten filled, and no one should have been stopped out. Now we're 50 points lower off those Thursday highs. Obviously, you'll want to take some profits either here or nearby, but I'm looking for a decline to at least 1080 (another 45 points from current futures trading levels). I'm still in 100% looking to take 1/2 profits at 1080ish, and hold the rest to see if we can manage a break through 1036... such a break would open the floor for 930, 860, and subsequently a break of 666 for new bear market lows... but this could take some time. Personally, I'm looking for the S&P 500 to sell off to around 300 timing uncertain... but a break of 1040 would be enough confirmation for me to consider that selloff is very likely underway.

US news last Friday came out close to expectations, and there's no worthwhile economic data due out Monday, so tonight's signal was all about an update on the current trends and some ideas of how to play them. If you have any questions about this stuff, feel free to ask and I'll try my best to answer.

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

To our success!
Sir Pipsalot