Top 5 – 05.27.13

Abridged TOP 5 HOT IDEAS

Sunday May 26, 2013

Guidelines for Top 5 Trading:
Proactive –
Enter trade 20 minutes before data, 25 pip stop, 25 pip first target
Reactive – Enter trade 5 minutes after data release, 20 pip stop, 15 pip target

1. GBP/USD – Hometrack Housing Survey



FUNDAMENTALS
Hometrack Housing Survey expected @ (7:01 PM ET / 23:01 GMT)
Our View – Neutral
Reason – Neutral
If Housing Survey index exceeds 0.8% = Buy GBP/USD
If Housing Survey is -0.1% or less = Sell GBP/USD

With U.K. and U.S. markets closed on Monday, we don’t expect the Hometrack housing survey to have a significant impact on the GBP unless there is a big surprise. Therefore this report should only traded reactively and only if it exceeds our parameters. So if the housing survey rises by 0.8% or more, the GBP/USD can be bought for a quick move higher. However if it drops by 0.1% or more, showing renewed weakness in the housing market, the GBP/USD can be sold for an extension lower. REACTIVE TRADE

TECHNICALS

Acts best among high beta
1.5000 now base
1.5200 caps

Cable traded best amongst the high beta FX having now establish clear support at 1.5000 level. The may try to rebound further but 1.5200 and then 1.5250 will provide stiff resistance to upside.

Tuesday May 28, 2013

1. EUR/USD – German Import Prices



FUNDAMENTALS
German Import Prices expected @ -0.4% (2 AM ET / 6 GMT)
Our View – Neutral
Reason – Neutral
If import prices grow by 0.5% or more = Buy EUR/USD
If import prices drop by -1% or more = Sell EUR/USD

With inflationary pressures in the region muted, German import prices are also not expected to have a large impact on the euro unless there is a sizeable surprise. Therefore this report should only traded reactively and if it exceeds our parameters. If import prices grow by 0.5% or more, the EUR/USD can be bought for a move higher. If import prices drop by 1% or more, the EUR/USD can be sold. REACTIVE TRADE

TECHNICALS

2800 continues to hold
Making higher lows
3000 major resistance for pair

The EUR/USD continues to consolidate in the broad 2800-2950 zone but the pair is making higher lows which suggests a small upside bias. The 1.3000 remains very strong resistance for now.

2. EUR/CHF – Swiss Trade Balance

FUNDAMENTALS
Swiss Trade Balance speaking @ 2B (2 AM ET / 6 GMT)
Our View – Neutral
Reason – Neutral
If Trade Surplus is less than 1B = Buy EUR/CHF
If Trade Surplus exceeds 2B = Sell EUR/CHF

Switzerland’s trade balance report is difficult to handicap but recently we have been seeing more disappointments than upside surprises in Swiss data. If the trade surplus shrinks to 1B or less, EUR/CHF can be bought for a move higher. If it exceeds 2B or more, EUR/CHF can be sold. REACTIVE TRADE

TECHNICALS

Finding support at 1.2400
1.2600 near term peak
Break of 1.2400 opens move to 1.2300

EUR/CHF has set a near term peak at 1.2600 and is now correcting the move. Fist support is at 1.2400, but a break there opens up a run to 1.2300 level.

3. USD/JPY – Consumer Confidence




FUNDAMENTALS
Consumer Confidence expected @ 70.9 (10 AM ET / 14 GMT)
Our View – Bullish USD
Reason – Large Increase in UMich, Small Decline in IBD
If Consumer Confidence index exceeds 72 = Buy USD/JPY
If Consumer Confidence index is less than 68 = Sell USD/JPY

We have good reasons to believe that the Conference Board’s consumer confidence index will show an improvement in sentiment as stocks have hit new highs and the labor market improved over the past month. Also a similar survey by the University of Michigan ticked higher. While the IBD index reported a decline in sentiment the drop was small. Therefore we feel the data can be traded proactively or reactively. For those who choose to wait, if the consumer confidence index exceeds 72, USD/JPY can be bought for a recovery trade. If the index drops below 68, USD/JPY can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

Correction in force
Break of 100.50 opens up test of 100.00
103.75 now near term top

The correction in USD/JPY continues with the pair now facing the possible break of 100.50 which could create a test of the key 100.00 level. The upside is capped by 102.50.

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