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Sir Pipsalot's Tuesday Market Update 04-20-2010

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, Apr 19, 2010.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    Hey folks,

    My idea for buying the dip on EUR/USD and GBP/USD didn't really work as I anticipated, but the general idea of EUR/USD and GBP/USD forming a bit of a bottom and turning higher is somewhat taking place. The turnaround seems to be fairly anemic though, and I think the key to the next several days will be the stock market and whether Europe continues to focus on risk aversion or shifts back towards neutrality or risk appetite. Essentially, if the stock market or risk sentiment in general resumes a strong downmove, EUR/USD and GBP/USD will probably head lower along with them.

    Stocks are in an interesting spot... actually right where I wanted them to pull back for a retracement entry right now around 1196.50 on ESM0 (S&P 500 futures). I think stocks are a good short right here not from an odds standpoint, but from a risk/reward standpoint. With a 5-10 point SL, a short from here could definitely yield 20-100 points if it turns south Tuesday. There's a lot of earnings coming out in the near term, so things could really go either way on that news. Also technically, if it's going to head lower, it's going to do it pretty soon... so I'm in short at 1196.25 with a 10 point SL and 50 point TP, but I'll probably exit in the aftermarket on Tuesday if the NY session shows the trade no love.

    In news Monday, we saw NZ CPI come in a bit low hitting our sell trigger and commence a very hard and fast 45 pip downmove. Usually when NZ news rockets NZD/USD that hard and fast right away, it's hard for that move to hold up. Typically, the slower moving price action actually has the better chance of extending further. In news Tuesday:

    0430 UK CPI y/y (3.1% expected) - Keep in mind that UK focuses mainly on the headline number, not the core. Anyhow, we haven't seen a decent deviation here in awhile, so a 0.2% surprise should get the GBP/USD going 40-50 pips, while 0-0.1% will likely be more of a whipsaw situation as we've seen the last couple months.
    If it comes out at 3.3% or higher, GBP/USD should rally 40-50 pips.
    If it comes out at 2.9% or lower, GBP/USD should fall 40-50 pips.

    0900 CAD Interest Rate Decision (no change at 0.25% expected) - The BoC has repeatedly held up their stance to hold off moving rates until the 2nd half of the year, and they have not budged on that stance, so there's little to look for on this one unless there's a huge surprise or some modification of their language that might take place. The economists are generally looking towards July for their eventual rate hike.
    If they hike rates early surprisingly, USD/CAD should drop 100+ pips.
    If they allude to hiking rates sooner than July, USD/CAD should drop 40-50 pips.
    If they imply they may push back their rate hike later than July, USD/CAD should rally 40-50 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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