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Sir Pipsalot's Tuesday Market Update 03-30-2010

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, Mar 29, 2010.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    Hey folks,

    EUR/USD did manage some gains back up to test that 1.3500 area repeatedly today, making some pips off momentum longs. Upon closer examination, I withdraw my recommendation for a short around 1.3550 as I think this retracement rally could work up to more of the 1.3800 range since I think I underestimated it's timeframe when I first evaluated it yesterday. I would look to continue looking long following momentum on 15m, or 1hr as long as we remain above the 60sma on the hourly chart. If we work down through the 60 SMA on the 1hr chart, it's time to throw up some fibs and plan where a good dip might be to buy the EUR/USD, and if recent highs hold, I'm thinking the 1.3350-90 range makes sense for now.

    Why the seemingly sudden change from long term bearish to obviously bullish? A valid question. Well, the CoT report yesterday (a bit after I published my signal) showed a massive surge in commercial EUR/USD longs which should lead to some additional follow-through momentum. And, we have a very obvious potentially complete 5 wave selloff on the daily chart and impulsive price action off those lows. If you remember back to Dec and January, my price target for the first major wave of this decline from the 1.5000 area was 1.3000 to 1.3500 and we definitely made it into that region. If this is going to retrace the selling from 1.5000, then this phase should at least take us to 1.3800 (area of previous 4th wave highs is a common target area for a top/reversal back down to the trend), but it could push higher (even just the 38% retrace is 1.3980).

    Stocks have continued to challenge/manipulate the technicals by refusing to sell off through 1159. We need to see a break lower Tuesday, or the odds degrade dramatically, so if we have another sideways or up day tomorrow I'll close my short and wait for a better signal.

    In news Tuesday:

    0200 UK Nationwide House Prices - This release had a very nice surprise last month, but little to no reaction, so I recommend skipping this and most other housing numbers right now.

    0430 UK GDP q/q final (0.3% expected) - Usually, there's not much of a surprise on the final revision of GDP, but if there is and our trigger is hit, I expect about a 40 pip reaction on GBP/USD.
    If it comes out at 0.5% or higher, GBP/USD should rally 40 pips within a few minutes.
    If it comes out at 0.1% or lower, GBP/USD should fall 40 pips within a few mintues.

    1000 US Consumer Confidence (50 expected) - In my opinion, this is the first important piece of market moving data this week as people are realizing that confidence is about the only thing holding up this market. Last month's surprise low reading sent the USD/JPY plummeting steadily, and a similar shock this month could have the same reaction. The bigger the surprise, the more potential we'll see follow through on USD/JPY and the stock market.
    If it comes out at 56 or higher, USD/JPY should rally 40 pips
    If it comes out at 44 or lower, USD/JPY should fall 40 pips

    2030 AU Retail Sales m/m (0.3% expected) - Last month's numbers were the first to provide disappointing price action in awhile, but it was likely due to the very poor Building Permits numbers that conflictingly came out at the same time. Usually that's not too bad an issue, but look out for any 5+ deviation on Building Permits to get at least some attention. Otherwise, it's game on for Aussie Retail Sales as usual.
    If it comes out at 1.0% or higher, AUD/USD should rally 40 pips
    If it comes out at -0.4% 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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