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Sir Pipsalot's Wednesday Market Update 05-12-2010

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, May 12, 2010.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    Hey folks,

    The sentiment towards the Euro bailout continues to be weary at best, and the EUR/USD has continued to hold downside momentum via the 10ema on the 1h chart. It's possible we may get a retracement of 150 pips or so for an easier short entry before we break last week's 1.2515 lows, but it's certainly not a guarantee. EUR/USD has declined about 100 pips since I recommended a long term no/low leverage short in the 1.2700's in yesterday's signal, and I expect at least 800-1000 pips down over the next several months, so that trade is still worth considering. For a tighter SL sell on a bounce, right now right around 1.2800 seems like an ideal spot to short into a bounce for Wednesday.

    Stocks did thrust a bit higher (temporarily) into my 1154-1174 sell range as I mentioned they might yesterday, and they obligingly turned back lower as well. With a high of 1169 on futures yesterday in the NY afternoon, you have no excuse for not getting in short somewhere up there this time =P If you're using a 15-30 point SL, a good initial TP is somewhere in the gap up over last weekend in the 1108 to 1124 range, but of course, save some of the trade for a larger meltdown that still has a solid chance of developing.

    In news Wednesday:

    0200 German GDP Prelim q/q (0.0% expected) - Usually I would expect this trade to cause a gentle 30-50 pip move over the course of 40 minutes if it was off by 0.2% or 0.3% or more. With the markets intensely focused on the state of the European periphery, and the bailout proposal, German GDP is more likely to create a sucker move than usual. If there is a noticable, sharp INITIAL reaction in the first few minutes to the number, look to get in the opposite direction about 25-30 pips away from prerelease.

    --If it comes out at 0.5% or higher, that's probably enough for a legit trade and EUR/USD will likely rally 40 pips or so over 30 minutes.
    --If it comes out at 0.2-0.3% I would look to sell into any rally approx 25-30 pips above the prerelease price.
    --If it comes out at -0.2 to -0.3%, I would look to buy into any selloff either at support at the time, or about 30 pips below prerelease. Since we're in a downtrend though, use conservative TP's
    --If it comes out at -0.5% or lower, look out below... try to get in short within 20 pips of prerelease and look for a 40-50 pip total move and maybe hold onto a portion with a large TP and a break-even SL.

    0430 UK Claimant Count Change (-20K expected) - This is in a similar situation to German GDP, where the UK political and debt situation is dominating sentiment and price action much more than typical UK economic readings.
    If it comes out higher than expected, but is still less than +10K, look to go long on GBP/USD about 30-40 pips below the prerelease price.
    If it comes out lower than expected but higher than -50K, look to go short on GBP/USD about 30-40 pips above the prerelease price.

    0530 BoE Inflation Report - This report is likely to be a bunch of bad news for the GBP, but it's hard to be sure as we haven't heard much from the BoE due to the elections. They're expected to raise their inflation forecast slightly without raising their growth forecast... If that is indeed what happens, any implications they may have to raise rates sooner to contain inflation would be GBP/USD bullish, while refusing to budge or even suggesting some form of easing to support growth would be very GBP/USD bearish. This report is all about reading into the statement, so it's hard to give much more of a preview than that beforehand.

    2130 AU Employment Change and Unemployment Rate (22.5K and 5.3% expected) - This report should be alright to trade a bit more legitimately as the Aussie economy is one of the few doing well in the world right now.
    If it comes out at 40K or higher, AUD/USD should rally 40-50 pips.
    If it comes out at 5K or lower, AUD/USD should fall 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
     
  2. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    Oh, and a follow-up on stocks... I somewhat doubt we'll see another pop up into the 1160's and 70's, so if you're not in short, you can consider doing some momentum following trades short, or getting in once we get some confirmation with a break of 1140 on futures.
     

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