Top 5 – 06.28.13

TOP 5 HOT IDEAS

DATE: Friday June 28, 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 – GfK Consumer Confidence



FUNDAMENTALS
GfK Confidence expected @ -21 (7:05 PM ET / 23:01 GMT)
Our View – Neutral
Reason – Neutral
If Confidence Index is -19 or better = Buy GBP/USD
If Confidence Index is -24 or worse = Sell GBP/USD

U.K. consumer confidence numbers are due for release this evening and unless there is a meaningful surprise we typically do not expect a big reaction in the GBP/USD. However traders are watching U.K. data very carefully to see if the recent improvements can return and therefore only a small change is needed to move the GBP. Still, the data is best traded reactively. If the consumer confidence index rises to -19 or better, we expect the GBP/USD to rally. If the index drops to -24 or lower, we expect the GBP/USD to slide. REACTIVE TRADE

TECHNICALS

5200 tested
Support for now
5350 caps upside

Cable failed to stay in the 5200-5400 corridor and once given the pair sold off to 5200, but the bounce as end of day suggests support and could provide a small rebound to the pair with 5350 capping upside.

2. USD/JPY – Japanese Industrial Production



FUNDAMENTALS
Industrial Production expected @ 0.2% (7:50 PM ET / 23:50 GMT)
Our View – Neutral
Reason – Neutral
If Industrial Production declines = Buy USD/JPY
If Industrial Production rises by 0.5% or more = Sell USD/JPY

There are a number of Japanese economic reports scheduled for release this evening but we feel that industrial production will be the most important. The data is difficult to handicap and therefore best traded reactively. If industrial production declines, USD/JPY can be bought for a recovery trade. If industrial production rises by 0.5% or more, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS

98.50 retaken
99.00 next in view
97.00 now near term support

USD/JPY continues to trade better to the upside with 98.50 taken out during the day and creating the prospect of an assault on the 99.00 barrier. 97.00 now acts as deep support for the pair.

3. EUR/USD – German Retail Sales

FUNDAMENTALS
German Retail Sales expected @ 0.4% (2 AM ET / 6 GMT)
Our View – Bullish EUR
Reason – Stronger Retail PMI and Consumer Confidence
If Retail Sales exceeds 0.6% = Buy EUR/USD
If Retail sales grow by 0.2% or less = Sell EUR/USD

We have good reasons to believe that German retail sales increased in the month of May. Consumer confidence improved and according to Markit Economics, retail PMI hit its highest level in 16 months. This data can therefore be traded proactively or reactively. For those who choose to wait, if retail sales growth exceeds 0.6%, the EUR/USD can be bought for a move higher. If retail sales growth is 0.2% or less the EUR/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

3000 continues to hold for the pair
Break of 3050 opens up a run back 3150
Break below 2950 opens up a retest of lows

EURUSD continues to hold support at the 3000 level with a break of 3050 opening up the prospect of a run back to 3150. Meanwhile a break of 2950 would signal a retest of the swing lows.

4. USD/CAD – Canadian GDP

FUNDAMENTALS
Canadian GDP expected @ 0.1% (8:30 AM ET / 12:30 GMT)
Our View – Bearish CAD
Reason – Trade weakened, retail sales up marginally
If GDP growth declines = Buy USD/CAD
If GDP growth exceeds 0.5% = Sell USD/CAD

We have good reasons to believe that Canadian GDP growth slowed in the month of April because trade activity weakened significantly. However we have a level 2 confidence for this trade because retail sales rose marginally. The data can be traded proactively or reactively. For those who choose to wait, if GDP growth declines, USD/CAD can be bought for a move higher. If GDP growth exceeds 0.5%, USD/CAD can be sold. PROACTIVE or REACTIVE TRADE
TECHNICALS

1.0500 possible top out level
1.0400 next level for shorts
Break of 1.0550 opens up run to 1.0700

USD/CAD after staging a massive rally may be starting to top out near the 1.0500 level as congestion suggests that the longs are losing momentum. 1.0400 is the near term target of shorts while a break of the upside could propel the pair to 1.0700

5. USD/JPY – Chicago PMI Index



FUNDAMENTALS
Chicago PMI expected @ 55 (9:45 AM ET / 13:45 GMT)
Our View – Bullish USD
Reason – Higher Empire and Philly
If Chicago PMI exceeds 60 = Buy USD/JPY
If Chicago PMI is less than 53 = Sell USD/JPY

We have good reasons to believe that the Chicago PMI report will surprise to the upside because manufacturing activity strengthened in the NY and Philadelphia region. This data can therefore be traded proactively or reactively. For those who choose to wait, if the Chicago PMI index exceeds 60, USD/JPY can be bought for a move higher. If the index drops to 53 or lower, USD/JPY can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

98.50 retaken
99.00 next in view
97.00 now near term support

USD/JPY continues to trade better to the upside with 98.50 taken out during the day and creating the prospect of an assault on the 99.00 barrier. 97.00 now acts as deep support for the pair.

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