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Sir Pipsalot's Monday Market Update 09-20-2010

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, Sep 20, 2010.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    Hey guys,

    Thursday and Friday saw a lot of 2-way action across the EUR/USD, GBP/USD, and USD/JPY. Right now I've really reset my market view and am coming from a neutral viewpoint across the board and looking at all the markets with a fresh eye. That being said, right now at the start of the week, I think there is a bit too much mixed pressures on the EUR/USD and GBP/USD to hone in on the next big move, so I'll leave those out for now and focus on a couple of other pairs.

    AUD/USD is benefiting greatly from RBA Stevens commentary over the weekend that essentially said the RBA will need to start tightening interest rates again soon. The AUD should be a strong beneficiary of any risk appetite, and see dips bought into when risk aversion hits markets. If you look at a daily chart, the AUD/USD broke through it's April/May highs last week and held onto the gains. It now looks set to propel even higher. Using a fib projection for the breakout places the likely target area for this rally around 0.9628 which is almost 200 pips higher from current levels. While buying AUD/USD on a dip into the 0.9360 to 0.9400 range seems ideal to me, we may be lucky enough to get a dip today during Europe unless the EUR/USD and GBP/USD head lower markedly. Because the USD picture is a bit uncertain to me today, I'd hedge myself into a a more pure AUD long by also shorting EUR/AUD. I plan to do this with somewhat low leverage and hold it for a day or two (now 0.9444 and 1.3851).

    USD/JPY seems poised for a turn lower here as exporter profit taking has really stalled out the USD/JPY rally. There is very likely further rallying to go, so I feel like shorting is a bit risky for me (even though it looks quite ready to rollover for almost 100 pips). Instead, I'd prefer to buy into a dip and add to my long. I think the best place to attempt this is around the 38% retracement which corresponds to 84.75. If you're looking to play the quick bounce trade, a 40 pip SL from there should work well, while if you're playing the bigger move towards the 87.00's, I'd suggest a 120 pip SL in case we retrace deeper before the next rally.

    In news Friday, US CPI came in a bit low, but ended up being a big dud of a news trade with little price action response on most pairs. This week is a slow news week for the most part, and nothing is due out Monday, but the action heats up a bit on Tuesday especially with the FOMC due to release their next interest rate statement. I'll cover that in tomorrow's signal.

    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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