Sir Pipsalot's Thursday Market Update 05-13-2010

Sir Pipsalot

Former FPA Special Consultant
Hey folks,

The EUR/USD continues it's relatively slow motion slide, and should see trades below it's March 2009 lows at 1.2456 in the next 3-10 days. Again, some type of low leverage type short is recommended, and if/when we get a decent 150+ pip bounce, that should be a good time to get in short with a leveraged trade and a reasonable SL. There's a lot of variations between my wave count, and those of other great traders I follow. We all have a different spin on it, but we're all looking for AT LEAST a break of those 1.2456 lows in the medium term. After that, we should find support in the 1.2100 to 1.2330 range. Personally, I think we may see even further losses, but I have a bit more of a pessimistic read on the charts than the other experts I closely follow.

USD/JPY right now though seems well-poised for a short. Now at 93.20-25, we have lots of resistance less than 50 pips away at various levels including consoidation highs, a 78% retracement, a 50% weekly chart retrace, and Monday's highs. If we top out soon in stocks, that will even further accellerate things to the downside. With a 40-50 pip SL, a USD/JPY should be good for 100, 200, or 600 pips if it works (those are my approx. TP's), and only cost a fraction of that if it doesn't with that SL.

I thought we might not have another pop-up rally left in us in stocks, but the markets did muster another Wednesday. Again, stocks are in my 1154-1174 sell region. A reasonable 20-30 point SL (depending on your entry) should be enough to keep us in if my bias is correct. Short term on Thursday, things could really go either way, but upside should be limited and my best guess is we'll be back into major selloff mode in 1-5 days.

In news Wednesday, we saw both German GDP and UK CCC have price action trade AGAINST the direction of the news surprise just as I forecasted yesterday. Unfortunately, there was no clear spike to get in better than prerelease; however, getting in against the numbers 1-2 minutes after the news came out close to the prerelease price yielded some good scalps, one of which we managed to grab in the Profit Mongers room for 15 pips. The BoE Inflation Report came out quite dovish in the text, but then King came out in support of David Cameron's policies which caused a confused retracement. In the end we settled on a swing trade short and captured 55 pips on 1/2 and are still in with a BE stop looking for more. AU Employment was too close to expected for a trade. In news Thursday:

1845 NZ Retail Sales m/m (1.1% expected) - This should be good for about 40 pips if we hit a trigger and avoid conflicts with the q/q number (0.3% expected).
If it comes out at 1.6% or higher, NZD/USD should rally 40 pips.
If it comes out at 0.6% or lower, NZD/USD should fall 40 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

To our success!
Sir Pipsalot