Top 5 09.16.13

TOP 5 HOT IDEAS

DATE: Monday Sept 16, 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 – PMI Services



FUNDAMENTALS
Business NZ Services expected @ (6:30 PM ET / 22:30 GMT)
Our View – Neutral
Reason – Lower PMI Manufacturing, Higher Credit Card Spending
If PMI Services exceed 60 = Buy NZD/USD
If PMI Services drop to 56 or lower = Sell NZD/USD

New Zealand PMI services is scheduled for release on Sunday and while the RBNZ has grown more hawkish and retail sales increased, a pullback in manufacturing activity and drop in consumer confidence makes this month’s report a tough call. We feel this report is best traded reactively. If the PMI Services index exceeds 60, the NZD/USD can be bought for a move higher. If the index drops to 56 or lower, NZD/USD can be sold. REACTIVE TRADE

TECHNICALS

8160 key to upside break
8100 near term support
Failure poses a double top

The kiwi tipped but wasn’t quite able to clear the 8160 resistance but continues to remain near the highs. A break above opens a run towards 8250 but failure would form a double top.

2. GBP/USD – Rightmove House Prices

FUNDAMENTALS
Rightmove House Prices expected @ (7:01 PM ET / 23:01 GMT)
Our View – Neutral
Reason – Neutral
If House Prices grow by 1% or more = Buy GBP/USD
If House Prices drop by -2% or more = Sell GBP/USD

The U.K.’s Rightmove house price report is not a big market mover for the GBP/USD unless there is a significant surprise. Therefore the data should only be traded reactively. If House Prices grow by 1% or more, the GBP/USD can be bought for a move higher. If House Prices drop by -2% or more, the GBP/USD can be sold. REACTIVE TRADE

TECHNICALS

Uptrend continues
1.6000 now in view
1.5800 supports

GBP/USD remain in a strong uptrend and having broken above 1.5800 it eyes 1.6000 highs while 1.5800 supports.

3. EUR/USD – Eurozone Consumer Prices

FUNDAMENTALS
EZ CPI expected @ 0.1% (5 AM ET / 9 GMT)
Our View – Neutral
Reason – Higher French CPI and lower German CPI
If CPI growth exceeds 0.5% = Buy EUR/USD
If CPI growth drops by -0.6% or more = Sell EUR/USD

We have strong reasons to believe that Eurozone Consumer Prices will surprise to the upside. When we look to handicap EZ data, we always turn to the releases of its 2 largest economies – Germany and France. Consumer prices in Germany stagnated in August while prices in France increased. As such, we feel that the data can only be traded reactively. If CPI rises by 0.5% or more, the EUR/USD can be bought for a move higher. If CPI growth drops by -0.6% or more, the EUR/USD can be sold. REACTIVE TRADE

TECHNICALS

Tight range remains
3320-3250 caps/holds
Break either way could signal move

Euro remains in a very tight range with 3320-3250 controlling all the action, but a break of ether side could signal a directional move.

4. USD/JPY – Empire State Manufacturing Survey

FUNDAMENTALS
Empire State Manufacturing Survey expected @ 9 (8:30 AM ET / 12:30 GMT)
Our View – Neutral
Reason – Neutral
If Empire State index exceeds 11 = Buy USD/JPY
If Empire State index is less than 7 = Sell USD/JPY

As one of the first manufacturing reports out of the U.S., the Empire State survey is difficult to handicap and therefore best traded reactively. If the Empire State manufacturing index exceeds 11, USD/JPY can be bought for a move higher. If the index drops to 7 or lower, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS

99.00 key support
100.00 now resistance
A break lower opens test of 97.00

USD/JPY has once again turned lower a push through 99.00 could open a full blow down move with a test of 97.00

5. USD/CAD – Canadian Existing Home Sales



FUNDAMENTALS
Existing Home Sales expected @ (9 AM ET / 13 GMT)
Our View – Neutral
Reason – Neutral
If CAD Existing home Sales fall by -1% or more = Buy USD/CAD
If CAD Existing home Sales rise by 1% or more = Sell USD/CAD

Canadian existing home sales is a difficult piece of data to handicap and also not incredibly market moving for the CAD unless there is a big surprise. Therefore the data can only be trade reactively. If existing home sales fall by -1% or more, we expect USD/CAD to rise. If existing home sales rise by 1% or more, we expect USD/CAD to fall. REACTIVE TRADE

TECHNICALS

1.0300 holds
1.0400 topside resistance
Possible base

USD/CAD may be carving out a possible base as 1.0300 holds and 1.0400 now becomes the next resistance to the upside. A break below would open a key test of 1.0100

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