Top 5 07.15.13

TOP 5 HOT IDEAS

DATE: Monday July 15, 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. NZD/USD – NZ PMI Services



FUNDAMENTALS
PMI Services expected @ (6:30PM ET / 22:30 GMT)
Our View – Bearish NZD
Reason – Decline in Business PMI Index
If PMI exceeds 58 = Buy NZD/USD
If PMI drops to 54 or lower = Sell NZD/USD

We have good reasons to believe that service sector activity in New Zealand slowed in the month of June because the business PMI index plunged from 59 to 54.7. The only wrinkle Is that credit card spending increased last month which should be good for service sector activity. Nonetheless we feel the data can be traded proactively or reactively. For those who choose to wait, if the PMI index exceeds 58, the NZD/USD can be bought for a move higher. If the index drops to 54 or lower, the NZD/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

7700 key support
Break opens run to 7500
7900 remains a cap

The kiwi continued to hold the 7700 key support although the reversal last week was bearish in nature and a move through 7700 could open a run towards the 7500 level.

2. AUD/USD – Chinese Q2 GDP



FUNDAMENTALS
Chinese GDP expected @ 7.5% (10 PM ET / 2 GMT)
Our View – Neutral
Reason – Neutral
If Chinese GDP growth is 7.7% or higher = Buy AUD/USD
If Chinese GDP growth is 7.4% or lower = Sell AUD/USD

There are a number of Chinese economic reports scheduled for release on Sunday but we feel that Q2 GDP numbers will be the most important. Economists are looking for growth to slow from 7.7% to 7.5% but last night, China’s Finance Minister said he expects growth this year to come in at 7%, which means that either growth will crash in the second half of the year or Q2 GDP will miss expectations with growth in China slowing more gradually throughout the year. Chinese economic data is always difficult to handicap and therefore best traded reactively. If Chinese GDP growth hits 7.4% or lower, the AUD/USD can be sold for a potential break of 90 cents. If GDP growth is 7.7% or higher the AUD/USD can be bought. REACTIVE TRADE

TECHNICALS

First test of 9000 holds
Retest possible
Break opens run to 8850

Although the first test of the 9000 level held a retest of the support could come this week and a break below could open a run all the way to 3 year support at 8850.

3. EUR/CHF – Swiss Producer Prices

FUNDAMENTALS
Swiss PPI expected @ 0.1% (3:15 AM ET / 7:15 GMT)
Our View – Neutral
Reason – Neutral
If PPI drops by -0.2% or more = Buy EUR/CHF
If PPI rises by 0.3% or more = Sell EUR/CHF

Switzerland’s producer price report is not a big market mover for the Franc unless there is a significant surprise. Therefore this data is best traded reactively. If PPI drops by -0.2% or more, EUR/CHF can be bought for a move higher. If PPI rises by 0.3% or more, EUR/CHF can be sold. REACTIVE TRADE

TECHNICALS

Run to 2500 fails
Lower top in place
2300 now support

The EUR/CHF breakout has failed and the pair now formed a lower top suggesting more selling to some. For now 1.2300 is near term support while 1.2450 caps the upside.

4. USD/JPY – U.S. Retail Sales

FUNDAMENTALS
US Retail Sales expected @ 0.8% (8:30 AM ET / 12:30 GMT)
Our View – Bullish USD
Reason – Stronger ICSC and slightly lower Johnson Redbook Survey
If Retail Sales rise by 1% or more = Buy USD/JPY
If Retail Sales rise by 0.4% or less = Sell USD/JPY

We have good reasons to believe that U.S. retail sales increased in the month of June. According to reports from the International Council of Shopping Centers, spending rose by its strongest amount since January but a separate survey conducted by Johnson Redbook showed a small drop in consumption. The data can therefore be traded proactively or reactively. For those who choose to wait, if retail sales rise by 1% or more, USD/JPY can be bought for an extension higher. If retail sales rise by 0.4% or less, USD/JPY can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

99.00 continues to hold
98.50 key support
100.00 still caps.

USD/JPY has once again found support at the 99.00 level but a break below 98.00 opens the possibility of a run to 95.00 meanwhile 100.00 still acts as resistance.

5. USD/CAD – Canadian Existing Home Sales



FUNDAMENTALS
Existing Home Sales expected @ (9 AM ET / 13 GMT)
Our View – Neutral
Reason – Neutral
If Existing Home Sales rise by 3% or less = Buy USD/CAD
If Existing Home sales rise by 4% or more = Sell USD/CAD

Canadian existing home sales are scheduled for release on Monday and the data is not a huge market mover unless there is a big surprise and for this reason, we believe the data should only be traded reactively. If existing home sales rise by 3% or less, we expect USD/CAD to rally. If existing home sales rise by 4% or more, we expect USD/CAD to fall. REACTIVE TRADETECHNICALS

1.0350 finds support
Consolidation possible
1.0450 caps upside

After a very strong move to the downside USD/CAD decline has finally found support at 1.0350 and the pair is likely to consolidate at these levels as it absorbs the moves of the past few days.

*Top 5 Archive Members Only Top 5

Leave a Comment

Your email address will not be published. Required fields are marked *