Top 5 – 10.16.13

TOP 5 HOT IDEAS

DATE: Wednesday Oct 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 – NZ Consumer Prices



FUNDAMENTALS
NZ Q3 Consumer Prices expected @ 0.8% (5:45 PM ET / 21:45 GMT)
Our View – Bearish NZD
Reason – Lower Food and Commodity Price Growth
If CPI growth exceeds 1.0% = Buy NZD/USD
If CPI growth is than 0.2% = Sell NZD/USD

New Zealand’s consumer price report is scheduled for release this evening and given the drop in food and commodity prices, we expect inflationary pressures to ease. As a result, we feel that the data can be traded proactively or reactively. For those who choose to wait, if CPI rises by 1.0% or more, we believe that the NZD/USD can be bought for a move higher. If CPI rises by 0.2% or less, the NZD/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

8400 possible double top
8450 puts more upside in view
8300 supports

The kiwi has moved higher towards the 8400 level but unless it can break through the 8450 barrier the pair stands in danger of making a double top. Meanwhile 8300 acts as support for now.

2. AUD/USD – Westpac Leading Index

FUNDAMENTALS
Leading Index expected @ (7:30 PM ET / 23:30 GMT)
Our View – Neutral
Reason – Neutral
If Leading Indicators exceed 0.9% = Buy AUD/USD
If Leading Indicators grows by less than 0.3%= Sell AUD/USD

Australian leading indicators are scheduled for release tonight and the data is not expected to have a significant impact on the AUD unless there is a big surprise. The data will most likely be weaker but still best traded reactively. If leading indicators exceed 0.9%, the AUD/USD can be bought for a move higher. If leading indicators grow by less than 0.3%, the AUD/USD can be sold. REACTIVE TRADE

TECHNICALS

9550 key to upside
Bias bullish
9400 deep support

The Aussie continues to perform well with bullish bias in tact. but the pair must clear the 9550 level in order to continue to the upside move, otherwise the stall here sets up a double top.

3. GBP/USD – UK Jobless Claims

FUNDAMENTALS
Jobless Claims Change expected @ -25K (4:30 AM ET / 8:30 GMT)
Our View – Bullish GBP
Reason – Stronger Job Growth in Manufacturing and Services
If Jobless Claims Drop by 35K or more = Buy GBP/USD
If Jobless Claims Drop by 15K or less = Sell GBP/USD

We have good reasons to believe that U.K. labor market conditions improved last month because the manufacturing and service sector saw stronger job growth. As a result, we believe that UK Employment numbers can be traded proactively or reactively. For those who choose to wait, if jobless claims drop by 35K or more, the GBP/USD can be bought for a continued move higher. If claims drop by 15K or less, the GBP/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

1.6000 still caps
1.5900 supports
1.5850 is deeper support

Cable continues to flame out at the 1.6000 level although the downside is contained by 1.5900 for now with 1.5850 as deeper support. A break below would open a new downleg.

4. EUR/USD – Eurozone Trade

FUNDAMENTALS
Eurozone Trade Balance expected @ 11.8B (5 AM ET / 9 GMT)
Our View – Bearish EUR
Reason – Smaller French trade deficit and German surplus
If EZ Trade Surplus exceeds 15B = Buy EUR/USD
If EZ Trade Surplus is less than 8B = Sell EUR/USD

Eurozone trade numbers are scheduled for release tomorrow and we believe that the data will surprise to the downside. Whenever we look to handicap EZ data, we always turn to reports of the 2 largest economies – Germany and France. Germany’s trade surplus declined while France reported a smaller deficit. For those who choose to wait, if the Eurozone’s trade balance exceeds 15B, the EUR/USD can be bought for an extension higher. If the trade balance is less than 8B, the EUR/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

3500 holds
3600 caps
3450 key to long term support

Although EURUSD has rebounded off the 3500 level it is still in a mild bearish bias and must break above 3650 to fully re-establish the uptrend. Meanwhile 3450 is key downside support.

5. USD/JPY – Federal Reserve Beige Book Report



FUNDAMENTALS
Beige Book expected @ (2 PM ET / 18 GMT)
Our View – Neutral
Reason – Neutral
If Fed Districts report economic improvement = Buy USD/JPY
If Fed Districts report economic deterioration = Sell USD/JPY

The Federal Reserve’s Beige Book report is scheduled for release tomorrow and with no major U.S. economic reports released this week, the report will take increased importance. The Beige Book is always difficult to handicap and therefore best traded reactively. If the 12 Fed Districts report economic improvements, USD/JPY can be bought for a quick reactive trade higher. If Fed Districts report economic deterioration, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS

98.50 fails to hold
98.00 now support
Break opens retest of 97.00

USD/JPY saw a sharp reversal end of day as it could not hold the 98.50 level and if the breaks below 98.00 it could drift lower towards the double bottom test of 97.00

*Top 5 Archive Members Only Top 5

Leave a Comment

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