Top 5 09.24.13

TOP 5 HOT IDEAS

DATE: Tuesday Sept 24, 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. EUR/USD – German IFO



FUNDAMENTALS
German IFO expected @ 108.0 (4 AM ET / 8 GMT)
Our View – Bearish EUR
Reason – Drop in industrial production and factory orders, drop in mfg PMI rise in ZEW
If the IFO index exceeds 110 = Buy EUR/USD
If the IFO index is less than 106 = Sell EUR/USD

We have good reasons to believe that the German IFO report could surprise to the downside. The latest German manufacturing PMI index, factory orders and industrial production declined with the ZEW survey being the only one that increased. Therefore we feel that the data can be traded proactively or reactively. For those who choose to wait, if the IFO index exceeds 110, the EUR/USD can be bought for an extension higher. If the index drops below 106, it can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

3600 caps
3450 key support
Break opens return to 3350

The euro appears to have topped out ahead of the the 1.3600 level and is now consolidating just below the 1.3500 level. A break below 1.3450 would open a run back to the 1.3350 breakout level.

2. GBP/USD – BBA Loans for House Purchases

FUNDAMENTALS
BBA Loans expected @ 38000 (4:30 AM ET / 8:30 GMT)
Our View – Neutral
Reason -- Neutral
If BBA Loans rise by 39000 or more = Buy GBP/USD
If BBA Loans rise by 36000 or less = Sell GBP/USD

The British Bankers Association is set to release its monthly report on House Purchases tomorrow and this report is not a huge market mover unless there is a big surprise. The number of homes sold has been climbing gradually since July and is expected to increase further in August. Low interest rates have been extremely supportive of the U.K. housing market. However the data is not exceptionally market moving unless there is a big surprise, which is why we feel that it is best traded reactively. If BBA loans rise by 39000 or more, we expect the GBP/USD to rally. If loans rise by 36000 or less, we expect the GBP/USD to weaken. REACTIVE TRADE

TECHNICALS

6000 holds for now
6100 caps upside
Break opens test of 5900

Cable has held the 1.6000 support level but the pair also looks to be exhausted to the upside and a break below opens a test of 1.5900.

3. USD/TRL – Turkish Industrial Confidence

FUNDAMENTALS
Industrial Production expected @ (7:30 AM ET / 11:30 GMT)
Our View – Neutral
Reason – Neutral
If Industrial Confidence drops below 105 = Buy USD/TRL
If Industrial Confidence rises above 109 = Sell USD/TRL

Industrial confidence numbers are scheduled for release from Turkey on Tuesday. Unfortunately the data is difficult to handicap and not incredibly market moving unless there is a big surprise. Therefore we feel that it is best traded reactively. If industrial confidence drops below 105, we expect USD/TRL to rise. If industrial confidence exceeds 109, we expect USD/TRL to fall. REACTIVE TRADE

TECHNICALS

1.9500 support
2.0000 key resistance
Range likely

USD/TRY has found support at the 1.9500 and has now bounced towards the 2.0000 mark but is very likely to run out of steam there as the current range holds.

4. USD/CAD – Canadian Retail Sales

FUNDAMENTALS
Retail Sales expected @ 0.5% (8:30 AM ET / 12:30 GMT)
Our View – Bullish CAD
Reason –Wholesale Sales up Strongly
If Retail sales growth declines by -0.1% or more = Buy USD/CAD
If Retail sales growth exceeds 0.8% = Sell USD/CAD

We have strong reasons to believe that Canadian retail sales will surprise to the upside because wholesale sales rose strongly in the month of July. We feel that this data can be traded proactively or reactively. For those who choose to wait, if retail sales growth declines by -0.1% or more, USD/CAD can be bought for a move higher. If retail sales growth exceeds 0.8%, USD/CAD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

1.0200 spike support
1.0300 caps for now
Break lower opens test of 1.0100-1.000 level

USD/CAD has put in a near term low at 1.0200 but for now the bounce has been modest -- capped at 1.0300 as the pair continues to point lower.

5. USD/JPY – Consumer Confidence



FUNDAMENTALS

Consumer Confidence expected @ 80 (10 AM ET / 14 GMT)
Our View – Bearish USD
Reason – UMich Down, IBD up slightly
If the index is 82 or higher = Buy USD/JPY
If the index drops to 80 or lower = Sell USD/JPY

We have good reasons to believe that the U.S. Conference Board consumer confidence index declined in the month of September. The University of Michigan consumer sentiment deteriorated this month while the Investors Business Daily report increased only marginally.
As such, we feel this data can be traded proactively or reactively. If the index rises to 82 or higher, we expect USD/JPY to rally. If the index drops to 80 or lower, we expect USD/JPY to fall. PROACTIVE or REACTIVE TRADE

TECHNICALS

99.00 fails to hold
98.50 near term support
98.00 deeper support

USD/JPY is starting to drift lower as 99.00 is given with 98.50 next in view for shorts. The pair faces resistance at 99.50 and strong support at 98.00

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