Top 5 07.30.13

TOP 5 HOT IDEAS

DATE: Tuesday July 30, 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 – Building Permits


FUNDAMENTALS
New Zealand Building Permits @ (6:45 PM ET / 22:45 GMT)
Our View – Neutral
Reason – Neutral
If Building Permits exceed 3% = Buy NZD/USD
If Building Permits is flat or contracts = Sell NZD/USD

New Zealand building permits is not a key market mover for the NZD/USD unless there is a meaningful surprise. As such we feel that the data is best traded reactively. If building permits exceed 3%, the NZD/USD can be bought for an extension higher. If building permits are flat or contracts, the NZD/USD can be sold. REACTIVE TRADE

TECHNICALS

8100 caps
8000 near term support
7900 deeper support

The kiwi found resistance at the 8100 level and the pair has now backed off towards 8000. A break lower could test support at 7900 while 8100 remains a key cap for now.

2. USD/JPY – Japanese Industrial Production



FUNDAMENTALS
Industrial Production expected @ -1.5% (7:50 PM ET / 23:50 GMT)
Our View – Neutral
Reason – Neutral
If Industrial Production declines by -2% ormore = Buy USD/JPY
If Industrial Production rises by 2.5% 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 by -2% or more, USD/JPY can be bought for a recovery trade. If industrial production rises by 2.5% or more, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS

98.00 broken
97.50 next in view
99.00-100.00 now resistance

USD/JPY broke the 98.00 level and now 97.50 comes into view as the downside pressure continues. A break there opens the path to 97.00 while topside is capped at 99.00-100.00

3. AUD/USD – Australian Building Approvals

FUNDAMENTALS
Building Approvals expected @ 2% (9:30 PM ET / 1:30 GMT)
Our View – Neutral
Reason – Neutral
If Building Approvals grow by 3% or more = Buy AUD/USD
If Building Approvals fall by 2% or more = Sell AUD/USD

Australian building approvals are scheduled for release this evening and we feel that it is best traded reactively because it is not a major market mover for the AUD unless there is a meaningful surprise. If Building Approvals grow by 3% or more, the AUD/USD can be bought for a move higher. If Building Approvals fall by 2% or more, the AUD/USD can be sold. REACTIVE TRADE

TECHNICALS

9300 fails again
9150 now support
Break there opens run to 9000

The Aussie continues to drip lower with 9200 tested today as 9300 fails again. A break below 9150 opens the way for a retest of the 9000.

4. EUR/USD – Eurozone Confidence

FUNDAMENTALS
EZ Economic Climate Index expected @ 93 (5 AM ET / 9 GMT)
Our View – Bullish EUR
Reason – IFO and PMI up, ZEW mixed
If the index is 95 or higher = Buy EUR/USD
If the index drops to 89 or lower = Sell EUR/USD

We have good reasons to believe that Eurozone economic confidence improved this month. While the ZEW survey was mixed, stocks headed higher, the IFO index of business sentiment ticked up along with the PMIs. As a result, we believe the data can be traded proactively or reactively. For those who choose to wait, if the index is 95 or higher, the EUR/USD can be bought for a move higher. If the index drops to 89 or lower, the EUR/USD can be sold for a reversal of recent gains. PROACTIVE or REACTIVE TRADE

TECHNICALS

1.3300 rejected again
1.3250 near term support
Break above 1.3300 opens up the run to 1.3400

The euro continued to fail at the 1.3300 level as that figure remains the key resistance point on the way to 1.3400. 1.3200 provides support on the downside.

5. USD/JPY – US Consumer Confidence



FUNDAMENTALS
Consumer Confidence expected @ 81 (10 AM ET / 14 GMT)
Our View – Neutral
Reason – IBD Down, UMich steady
If the index is 84 or higher = Buy USD/JPY
If the index drops to 78 or lower = Sell USD/JPY

This month’s U.S. consumer confidence index from the Conference Board is a tough call. According to Investors Business Daily, consumer confidence declined but according to a similar survey conducted by the University of Michigan, it held steady. Therefore we feel that the data is best traded reactively. If the index rises to 84 or higher, we expect USD/JPY to rally. If the index drops to 78 or lower, we expect USD/JPY to fall. REACTIVE TRADE

TECHNICALS

98.00 broken
97.50 next in view
99.00-100.00 now resistance

USD/JPY broke the 98.00 level and now 97.50 comes into view as the downside pressure continues. A break there opens the path to 97.00 while topside is capped at 99.00-100.00

*Top 5 Archive Members Only Top 5

Leave a Comment

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