Top 5 10.07.13

TOP 5 HOT IDEAS

DATE: Monday Oct 7, 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. AUD/USD – Australian PMI Construction



FUNDAMENTALS
PMI Construction expected @ (6:30 PM ET / 22:30 GMT)
Our View – Neutral
Reason – Neutral
If the PMI index exceeds 45 = Buy AUD/USD
If the PMI index is less than 41 = Sell AUD/USD

Australia’s PMI Construction index is not a huge market mover for the Australian dollar unless there is a big surprise so the only opportunity is to trade the report reactively. If the PMI index exceeds 45, the AUD/USD can be bought for a move higher. If the PMI index drops to 41 or less, the AUD/USD can be sold. REACTIVE TRADE

TECHNICALS

9400 holds
9500 key resistance
Break opens run to 9700

Aussie continues to perform well having held above the 9400 level against a pretty strong dollar.The pair continues to face stiff resistance at 9500 bt a break above can lead to a run to 9700

2. USD/JPY – Japanese Leading Index

FUNDAMENTALS
Leading Index expected @ 106.6 (1 AM ET / 5 GMT)
Our View – Neutral
Reason – Neutral
If the leading index drops to 105 or lower = Buy USD/JPY
If the leading index rises to 110 or higher = Sell USD/JPY

Japanese leading indicators are not a huge market mover for the Yen unless there is a big surprise. As a result, the data is best traded reactively. If the leading index drops to 105 or lower, we expect USD/JPY to rally. If the index rises to 110 or higher, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS

97.00 tested again
Down trend remains in place
98.00 still resistance

USD/JPY remains in a downtrend having now tested the 97.00 level yet again. That level is key to hold and a break there opens a test of 95.50 level. Upside is capped at 98.00

3. USD/DKK – Denmark Industrial Production

FUNDAMENTALS
Industrial Production @ -1% (3 AM ET / 7 GMT)
Our View – Neutral
Reason – Neutral
If Industrial Production falls by -2% or more = Buy USD/DKK
If Industrial Production rises by 3% or more = Sell USD/DKK

Industrial Production from Denmark is scheduled for release tomorrow and while the data is important, it is difficult to handicap and therefore best traded reactively. If Industrial Production falls by -2% or more USD/DKK can be bought for a move higher. However if Industrial Production rises by 3% or more, USD/DKK can be sold. REACTIVE TRADE

TECHNICALS

5.4500 may be near term bottom
5.5500 caps for now
Consolidation within downtrend

USD/DKK donwtrend continues but the pair may have set a near term bottom at 5.4500. 5.5500 caps upside for now

4. USD/CAD – Building Permits

FUNDAMENTALS
Building Permits @ -5.7% (8:30 AM ET / 12:30 GMT)
Our View – Neutral
Reason – Neutral
If Canadian Building Permits fall by -10% or more = Buy USD/CAD
If Canadian Building Permits rise by 4% or less = Sell USD/CAD

Canadian building permits are not a huge market mover for the Canadian dollar unless there is a big surprise. Therefore the data should only be traded reactively. If Building Permits fall by 10% or more, USD/CAD can be bought for an extension higher. If Canadian Building Permits rise by 4% or less, USD/CAD can be sold. REACTIVE TRADE

TECHNICALS

1.0350 caps the upside
1.0250 next downside target
Consolidation in place

Loonie continues to consolidate with 1.0350 capping upside for now and 1.0250 next target for the shorts.

5. EUR/USD – US Budget Talks





FUNDAMENTALS

Ongoing US Budget Talks

The ongoing U.S. budget negotiations will continue to be a big driver of currency flows. If the House and Senate fail to reach an agreement this weekend, the EUR/USD could resume its rise in Monday trade. The currency pair will be particularly sensitive to the moves of T-bills and U.S. default risk. EUR/USD could have upward bias as long as the US government is shutdown but on the first sign of progress in Washington, the currency pair could fall quickly as the dollar enjoys a relief rally.

TECHNICALS

3650 top for now
3500 key support
3450 deeper support

EUR/USD looks to have set a near term top at 3650 with 3500 now key support. A break there tests 3450 which was the breakout level of this latest upleg.

*Top 5 Archive Members Only Top 5

Leave a Comment

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