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Sir Pipsalot's Wednesday Market Update 08-18-2010

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, Aug 18, 2010.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    Hey folks,

    Tuesday saw some great price action on the EUR/USD as it floated up to my 1.2900 sell level, played with it a few times, then eventually sold off into the evening (now at 1.2840). I even bumped yesterday's signal while we were floating around 1.2900 to remind people about that level.

    Looking ahead to Wednesday, EUR/USD seems set to probe lower, or at least establish a more concrete consolidation range. My 1.2900 short has a TP a bit ahead of 1.2800, and I've tightened my SL to 1.2925. I'm still holding a portion of my position trade short from 1.3070 waiting for 1.2420-1.2610 support as well. If we set a solid low around 1.2800 and start pushing higher, that may set up a reverse head & shoulders on the 3h or 4h chart which would imply a break of 1.2920 would see a rally to 1.3090... so that's something to look out for short to medium term in the long direction if 1.2800 holds strong.

    USD/JPY continues to hang out near its big 85.00 support region, and while it was a good buy at times as I brought up in recent signals, I would stop buying the support here. Recently Japan has come out weak on the strong JPY, so the expectation of intervention in this region is waning fast, as is likely bids to support price here. With the potential of a large stock selloff, USD/JPY is setting up for more of a breakout lower than a bounce. While I don't have a specific trade plan for that just yet, I'm bringing it up just to remind you to think twice about any new USD/JPY longs, espcecially for swings or position trades.

    Stocks rallied today as high as 1098.50 on the S&P futures (missing a sell order of mine by 1-2 points... doh) before turning a bit lower to end the day. This current retracement is likely to top out relatively soon in the 1095-1105 range, so I think that's the ideal area to add to a short position trade, or to enter a new swing or scalp trade short. Since I'm already short on a trade from 1130, but took some profits, I'll probably reenter that portion short in that resistance region with a 20-30 point SL and TP.

    In news Tuesday, we saw UK CPI headline come in as expected and prove that Core CPI figures (which came in very low) don't really move the market as GBP/USD barely pushed 20 pips lower, then reversed into a rally. Always good to get bits of confirmation like that even though there was no trade. In news Wednesday:

    0430 BoE Meeting Minutes (8-1 vote somewhat expected) - With the dovish language from the BoE Inflation Report, there is speculation that additional quantitative easing may have been discussed at the last meeting and that perhaps 1 or 2 members even voted for it. I would expect GBP/USD to be weak from about 0300 EST (London Open) until the news based on this anticipation. From a currency sentiment standpoint, I think this controversy could set up for a decent news trade as well:

    --If there was no new discussion of additional quantitative easing and the vote was 8-1 (Sentance wanting a hike) - Those anticipating new QE will be disappointed and GBP/USD shoudl rally 30-40 pips from short covering.

    --If 1 or 2 members actually voted for some form of additional QE - GBP/USD should gain downside momentum good for 40-50 pips.

    --If we get the 8-1 vote as expected, but there is a little discussion of QE (without anyone voting for it yet), that's pretty close to a middle ground of what the market is expecting, so I'd stay out.

    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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    On BoE minutes the first scenario played out and led to a 75 pip rally over 10 minutes. Even nicer short covering than I had expected. Wound up making about +20 and +40 on the afterspike.
     

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