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Sir Pipsalot's Thursday Market Update 11-04-2010

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, Nov 4, 2010.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    Hey guys,

    The FOMC decided to come out with 600B through June which was a little less than expected, but still a robust gesture. My hypothesis that we would see buy the rumor/sell the news type price action was correct for the period shortly after the report, but has since broken apart with the subsequent rally we've seen. My thinking is it's harder for the USD to get oversold when there's just so much of it out there to sell. China's strong concern also highlights the fact that they're not happy and visibly diversifying out of the USD. As far as further USD weakness is concerned, it seems likely to continue as long as China is dumping USD. We've seen them do major intentional damage to USD/JPY in recent months, and I think the ridiculous strength of this EUR/USD rally has to be due to accellerating liquidation from China. That being the case, it makes picking spots and targets and levels almost irrelevant to trading landscape at times. While I think we definitely will have a USD short squeeze at some point, the timing of it may end up being somewhat arbitrary, so for now I would just use momentum following techniques on the major pairs in the M5, M15, and/or 1H chart worlds and wait for clear signs this move has matured and turned lower.

    0800 UK Interest Rate Decision - There is clear consensus that they'll keep rates unchanged with no change to their APF, but with the Fed pushing QE2, who knows? If they launch new APF measures, GBP/USD should drop 70+ pips, and EUR/GBP should rally 50 pips. That's the only scenario likely tradable since they don't issue a statetment.

    1000 CAD Ivey PMI (65.0 expected) - This one is a pretty solid trade that sometimes has a decent spike with additional follow-through, and other times has a modest spike with plenty of slow follow-through.

    Spike strategy: Use somewhat tight slippage control to ensure entry within 10 pips of prerelease. Typically the spike is 20 pips with an extention to new extremes (30-40 pips) over 5-10 minutes.

    Afterspike: Oftentimes USD/CAD will go into a nice slow-motion trend that will push prices even further over 2 hours after release. Try to get in within 10-15 pips of prerelease in the first few minutes and look for about 20 pips profit on the first half, and 40+ on the 2nd half, but close after 2-3 hours if it doesn't make it there.

    If it comes out at 70 or higher, USD/CAD should sell off 30-40 pips
    If it comes out at 60 or lower, USD/CAD should rally 30-40 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 sirpipsalot@profitmongers.com

    To our success!
    Sir Pipsalot
     
  2. vincentw

    vincentw Recruit

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    USD weakness?

    Hi SirPips,
    do you think America is wanting a weak USD for exports?
    I have a friend who really believes the GBP/USD will be 2.15 long term. THe E/U looks like it's strenghtening to test 1.46, maybe it will sell off then and then continue it's uptrend. I saw an article recently that George Soros said the E/U will only strengthen from now on and won't get to below1.18 again (i was hoping it would).
    what do you think?
    thanks.
     

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