1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

Sir Pipsalot's Wednesday Market Update 04-21-2010

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, Apr 21, 2010.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

    Joined:
    Dec 11, 2007
    Messages:
    511
    Likes Received:
    0
    Hey folks,

    I was hoping we'd see a clear shift towards risk appetite or risk aversion Tuesday, but the result was more of a mixed tone. We saw back and forth action ending up with the EUR/USD a bit lower and the GBP/USD a bit higher. Taking a closer look at it, it seems like the Euro is likely to slide a bit more down to the 1.3350-80 area (fib extentions), but then bounce pretty nicely from there as an hourly chart 5-wave decline finishes up, so a limit buy around 1.3385 with a 50 pip SL and 50-100 pip TP makes good sense.

    I took a bit of a gamble on a stock short yesterday, but I got stopped out. Like I said yesterday, if we were going to sell off, it was going to have to happen right away and it didn't. There's still a somewhat small chance we'll double top and head lower from there, but the rally off Monday's lows is impulsive enough that there's a lot of warning signs that last week's high won't last and we'll have another thrust higher towards the 1230 range. My suggestion here is to watch for a break of last week's highs (about 1210 on futures) and go long if those highs break, hold and retrace back down to that level and find it supportive. In that case I'd go long around 1210-1214 with a 10-15 point SL and a 10-15 point TP.

    In news Tuesday, we saw UK CPI come out high, but it was rumored in advance to be high, so the upside was limited to 40 pips with a steep retracement as those rumor buyers took their profits after the news. CAD Interest rates came out very interestingly as they of course did not raise rates, but their admission that growth and inflation are somewhat above expectations, and that it was "appropriate to lessen the degree of stimulus," that was a clear hint they may be hiking rates earlier than the July expectation (next meeting in June), so the USD/CAD dropped over 100 pips on CAD strengthening following that implication. I said yesterday that: "If they allude to hiking rates sooner than July, USD/CAD should drop 40-50 pips." So we definitely had the right idea, but the market pushed a lot harder on the news than I thought, probably since the statement was quite clear. In news Wednesday:

    0430 UK Claimant Count Change and BoE Minutes (-10K, unanimous vote, and neutral tone expected) - We've seen the Claimant Count Change (unemployment) data really rev up the GBP in recent months, so it's definitely worth monitoring closely. While the BoE minutes will help or hurt the longer term move, the initial surge should play off of these unemployment figures. I'll break down both inputs below:

    If CCC comes out at 0K or positive (bad news), GBP/USD should fall 40-50 pips.
    If CCC comes out at -15K or lower (good news), GBP/USD should rally 40-50 pips.
    If the BoE comes out hawkish or has any dissenters looking to hike rates, GBP/USD should see extra strengthening pressure.
    If the BoE comes out dovish or has any dissenters looking to restart the Asset Purchase Facility, GBP/USD should see extra weakening pressure.

    Obviously, it would best to get out or stay out if the pressure from the minutes opposes the surprise on the unemployment data.

    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
     

Share This Page