Sir Pipsalot's Wednesday Market Update 07-07-2010

Sir Pipsalot

Former FPA Special Consultant
Hey folks,

EUR/USD was indeed a good buy yesterday around 1.2500 and managed to easily hit the 40-100 pip TP. For now, the Euro is in the same situation where it has bullish momentum, but is in danger of topping out at some point soon. A break below 1.2450 should confirm a more medium term selloff that should see follow-through down to at least 1.2200 and potentially much lower. Shorter term though, while I made some money on a Euro long yesterday, I don't see a very solid setup here in either direction so I'm staying neutral for a bit.

Also, the AUD/JPY trade has given us a lot of see-saw since entering short last Thursday around 73.50 - 74.00, but that's good. With any position trade, it's best to sell a bit on rallies, and TP a bit on dips with a generous SL while you wait for it to get moving. There's more to it than that of course, but just look at my chart of AUD/JPY since I got short:

Stocks finally rallied back up to retest the 1035-1040 support level broken last week. As I mentioned in last Thursday's signal (which I've been reemphasizing all week), the perfect entry would be on a bounce to the 1035-1040 range (we topped out today with a rally to 1039), so anyone planning to get in on the short should be in by now. This pattern of support break, holding below, then rallying up to test the support now as resistance is very common on big breakouts and it's very likely we're headed lower now both short and medium term now that the pattern is complete. Again, over the next 3-5 weeks I'm targetting at least 950, but likely 890.

In news Tuesday, we saw Aussie Interest Rates come out as expected, and the statement was very vanilla providing little ammunition to either side, but it seems a lot of bearish anticipation had built up for this one, so when they got nothing out of the statement to help their case, a lot of short covering ensued. In news Wednesday:

2130 AU Employment Change (EC) & Unemployment Rate (UR) (15K and 5.2% expected) - Either a big surprise on the Employment Change OR a big surprise on the Unemployment Rate can make for a nice predictable move on this one, as long as there's not a huge conflict between the two. Lately, Aussie news has been quite volatile and will often produce 40-50 pips in the first 5-20 minutes, and sometimes make an extention for 100+ pips from prerelease at some point within 2 hours.
--If EC comes out at 31K or higher (without conflicting UR), AUD/USD should rally as described above.
--If EC comes out at -1K or lower (without conflicting UR), AUD/USD should sell off as described above.
--If UR comes out at 5.0% or lower (without conflicting EC), AUD/USd should rally as described above.
--If UR comes out at 5.4% or higher (without conflicting EC), AUD/USD should sell off as described above.
--If there is a conflict between the two figures, a good move may still develop but the direction and extent may be too unpredictable to trade.

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

To our success!
Sir Pipsalot
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