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Sir Pipsalot's Tuesday Market Update 03-02-2010

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, Mar 1, 2010.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    Hey folks,

    Last week I advocated longs in the 1.3440-80 range and shorts in the 1.3600-1.3650 range, and both opportunities have played out well thusfar in the rangebound EUR/USD 3h or 4h chart. This week though, we're gearing up for a pretty strong break one way or the other, so aside from small scalps, I wouldn't be looking to play the range any longer. If you're going to buy a dip on EUR/USD below 1.3500 (not a bad idea), either take quick profits or tilt the risk/reward in your favor and hold out for a major break higher and score a 3, 4, or 5 to 1 type trade. You can try the same thing in reverse with a rally to the mid 1.3600's.

    Stocks have stubbornly rallied and are still likely finishing off a countertrend push up which will be followed by a lengthy decline. In trying to time this top accurately in the short term timeframe, I've found myself getting in a bit early, so I'm going to refrain from any futher shorter term entries until the turn lower is more substantially confirmed. Until then my recommendation is to consider longer term minded shorts with ample (20-40 point) SL's to position for the next down wave as it should span 100-200 points or more once it gets started.

    In news Monday, we saw most news come out close to expectations, but ISM Manufacturing came in somewhat low and EUR/JPY and USD/JPY posted some modest declines, and RBA's Interest Rate Decision led to a hike as somewhat expected, but caused a bit of a whipsaw due to conflicting interpretations of the commentary. In news Tuesday:

    0900 BOC Interest Rate Decision (no change at 0.25% expected) - There is little reason to expect a change in rates here as they have repeatedly upheld that rates should stay steady through the first half of 2010. However, there is increasing expectation that they will hike a little sooner in the 2nd half of 2010 rather than later as retail sales and inflation figures have heated up and Canada admittedly has been better off than most of the other developed countries.
    If they have a balanced or hawkish statement where they maintain the first half of 2010 statement or even push up the possibility of a hike sooner than that, USD/CAD should weaken an amount based on the severity of the stance.
    If they extend their unchanged rates through the first half of 2010 to reach further back and push back a potential hike, USD/CAD should sell off 40-50 pips.

    1930 AU GDP q/q (0.9% expected) - With somewhat neutral references in the RBA statement regarding GDP like "Growth likely to be close to trend," there weren't any clear hints as to whether Tuesday's GDP readings will be much stronger or weaker than expected. A 0.2% trigger is usually quite reliable to see a 40+ pip move on this report.
    If it comes out at 1.1% or higher, AUD/USD should rally 40+ pips.
    If it comes out at 0.7% or lower, AUD/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 sirpipsalot@profitmongers.com

    To our success!
    Sir Pipsalot
     

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