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Sir Pipsalot's Wednesday Market Update 07-21-2010

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, Jul 20, 2010.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    Hey folks,

    EUR/USD continues to waver about in its 1.2850 - 1.3000 band, but until a more material break develops one way or the other, it's a bit difficult to fundamentally predict the next major medium term move with mixed pressures being placed on the pair right now. Again, I'm confident a significant high is either in place, or will soon be in place, but I'm looking for more confirmation before I attempt another trade, so I'll revisit the Euro in tomorrow's signal.

    USD/JPY floated up a bit along with stocks today, but is still set up to sell off and extend lower probably to around 85.00 (now 87.14). The wild card here is stocks. If stocks work into another bullish leg here soon (a possibility), USD/JPY will likely not see the downside potential I'm looking for there. Both the USD/JPY and Stock short bias are fairly intertwined, but thankfully, the USD/JPY rally looks much more corrective than impulsive. A rally above 88.00 would put this forecast in jeopardy, while a decline to new lows below Friday's 86.27 low will dramatically solidify the forecast.

    Stocks had a pretty decent rally today, retracing a decent portion of Friday's sharp losses. While we've seen some success from Friday's S&P short around 1090, it's still not completely clear how much downside we'll see. I plan to keep a fairly tight SL on this one since a rally through 1100 will likely mean we're in a C wave higher which would mean 1130 is the likely target, and today's decline to 1051 was all we're going to get on wave B down. Still, my personal targets on this short are 1070, 1040-1050 (just missed), and 1010-1020, the first of which has been filled.

    In news Tuesday, we saw the BOC hike as expected, but deliver a very cautious tone implying rate hikes will be very slow moving foward. This created a nice 60 pip rally on USD/CAD over the course of 40 minutes. In news Wednesday:

    0430 BoE Meeting Minutes - In the last set of minutes it was revealed that BoE member Sentance voted for a rate hike. Analysts expect another 7-1 vote, so should any other BoE members join in calling for a rate hike, things could get juicy.
    If 2 or more members voted for a hike, GBP/USD should rally 50+ pips.
    If only Sentance voted for a hike, while King and others express a much more dovish tone, GBP/USD should sell off 30-40 pips.
    If only Sentance voted for a hike, and the rest of the members expressed mixed sentiment with an overall neutral tone, that's pretty much what's expected, so I'd stay out of the trade.

    1000 Bernanke Testimony on Capitol Hill - I don't have anything specific to look out for here, but I'm just reminding everyone that there's a wild card out there during the NY session, so listen up just in case a big tape bomb gets thrown out there on the USD.

    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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    Sir Pipsalot's Tuesday Market Update 07-20-2010

    Hey folks,

    Well, my EUR/USD short idea from yesterday hasn't panned out well and we're still stuck up in this 1.2850 to 1.3000 range. Most experts I closely follow agree the Euro is near a significant multiweek high, but trying to pick the spot has proven a bit troublesome. I'm back to neutral on EUR/USD for the time being.

    USD/JPY consolidated Monday but still looks like a good hold for a short, expecially if stocks continue lower.

    Even if we're working into a more substantial rally phase on stocks, we should at least get a bit more follow through lower into the 1040-1051 range on S&P 500 futures. It's still my view however that 1100 was more likely a lasting high that will see a selloff somewhere in the ballpark of 890-950. I'd like to make money either way though on my short from 1090, so I've taken some profits at 1070 and plan to take more profits in the 1040's.

    In news Tuesday, we have 1 report to look forward to:

    0900 CAD Interest Rates (0.25% hike to 0.75% unanimously expected) - This report should lead to some very interesting price action. If they hike as expected, the trade could prove to be a bit subjective leaning on the weighting of the statement, but if they hold rates steady, it should be clear, easy and momentous. Investors are pricing in a 96% chance the BOC will follow June's initial rate hike with another.
    --If they keep rates on hold at 0.50%, USD/CAD should rally 50-100 pips.
    --If they hike to 1.00% (more than expected), USD/CAD should drop 50-100 pips.
    --If they hike to 0.75% as expected, but offer a much more dovish/neutral outlook, USD/CAD will see some volatility that should give way to a 50 pip rally.
    --If they hike to 0.75% as expected, and strongly support their hike with hawkish rhetoric, USD/CAD should see a 40-50 pip selloff.

    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
     
  3. mechtech63

    mechtech63 Corporal

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    EU Stress Test

    Sir Pips,

    Seems like many are holding their breath for the EU stress test results. Could be a real mover depending on the results.

    BTW do you know what time Friday the results are to be announced?
     
  4. RahmanSL

    RahmanSL Major

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    Sir Pipsalot,

    I am really in a delima as I have entered a trade on EUR/USD short 1.2955 two days ago.
    Since yesterday, it's showing profits and I have been wondering whether to close out that trade or to hang onto it until tomorrow. Signals from all parties (including yours) are mixed and uncertain.

    Thanks!
     
  5. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    With the break below 1.2850, it looks like the Euro has topped out significantly and is heading quite a bit lower to around 1.2450... I'd consider taking some profits but holding on for quite a bit more as well.
     
  6. RahmanSL

    RahmanSL Major

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    Yes, I held onto that position and closed that since last night with good profits.
    Thanks for advice! : )
     

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