Top 5 10.17.13

TOP 5 HOT IDEAS

DATE: Thursday Oct 17, 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 – ANZ Consumer Confidence



FUNDAMENTALS
NZ Confidence expected @ (9 PM ET / 1 GMT)
Our View – Neutral
Reason – Neutral
If Consumer Confidence grows by 2% or more = Buy NZD/USD
If Consumer Confidence contracts by -4% or more = Sell NZD/USD

New Zealand’s ANZ consumer confidence report is not a huge market mover for the NZD/USD unless there is a big surprise but given the recent improvements in the economy, good data could propel the gains for NZD. Yet it is best traded reactively. If consumer confidence grows by 2% or more, the NZD/USD can be bought for a move higher. If confidence contracts by -4% or more, the NZD/USD can be sold REACTIVE TRADE

TECHNICALS

8450 still caps
Failure to break creates double top
8300 now support

The kiwi pushed but failed to take out the 8450 level and a failure to breach it could create a double top at that level while 8300 provides support.

2. AUD/USD – NAB Business Confidence

FUNDAMENTALS
Business Confidence expected @ (9:30 PM ET / 1:30 GMT)
Our View – Neutral
Reason – Neutral
If NAB exceeds 5 = Buy AUD/USD
If NAB is less than -5 = Sell AUD/USD

This month’s Australian business confidence report is a tough call because Australian and Chinese data has been mixed. Business confidence is an important release but is only market moving if there is a large enough surprise. This month’s report should be traded reactively. If NAB confidence turns positive and exceeds 5, we expect the AUD/USD to rise. If NAB confidence falls to -5 or lower, we expect the AUD/USD to slide. REACTIVE TRADE

TECHNICALS

9550 taken
9600 next target of longs
9500 now near term support

Aussie march higher continues with 9550 now taken out. The pair next targets the 9600 figure while 9500 becomes near term support.

3. EUR/USD – Eurozone Current Account Balance

FUNDAMENTALS
EZ Current Account Balance expected @ (4 AM ET / 8 GMT)
Our View – Bearish EUR
Reason – Smaller German Current Account Surplus, Marginal Improvement in French deficit
If EZ Current Account Balance exceeds 20B = Buy EUR/USD
If EZ Current Account Balance is less than 10B = Sell EUR/USD

We have good reasons to believe that the Eurozone’s current account surplus shrank in the month of August. Whenever we look to handicap EZ data we always turn to the reports of its 2 largest economies – Germany and France. The latest reports show Germany reporting a smaller current account surplus and France reporting a slight improvement in its deficit. As such we feel that the data can be traded proactively or reactively. For those who choose to wait, if the EZ current account balance exceeds 20B, the EUR/USD can be bought for a move higher. If the current account balance is less than 10B, the EUR/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

3500 tested for second day in a row
3600 still caps
3450 is key deeper support

The euro tested the 3500 for 2nd day in a row and bounced suggesting strong support at there levels but 3600 still caps the upside.

4. GBP/USD – UK Retail Sales

FUNDAMENTALS
Retail Sales expected @ 0.4% (4:30 AM ET / 8:30 GMT)
Our View – Bearish GBP
Reason – Significant Slowdown in BRC Retail Sales
If Retail Sales grow by 0.7% or more = Buy GBP/USD
If Retail Sales rise by 0.1% or less = Sell GBP/USD

We have good reasons to believe that U.K. retail sales grew at a slower pace last month because shop prices declined and spending fell according to a similar report conducted by the British Retail Consortium. Therefore we feel that the data can be traded proactively or reactively. For those who choose to wait, if retail sales grow by 0.7% or more, the GBP/USD can be bought for a move higher. However if retail sales rise by 0.1% or less, the GBP/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

1.6000 cant hold
1.5900 still supports
Range persists

Cable continues to operate within a well defined 1.6000-1.5900 range finding seller and buyer at both edges yet again. A break either way could signal a bigger move.

5. USD/JPY – Philadelphia Fed Survey



FUNDAMENTALS
Philly Fed Survey expected @ 15 (10 AM ET / 14 GMT)
Our View – Bearish USD
Reason – Weaker Empire State Survey
If the Philly Fed index rises to 24 or higher = Buy USD/JPY
If the Philly Fed index falls to 12 or lower = Sell USD/JPY

We have good reasons to believe that the Philly Fed survey will be weaker because of the decline in the Empire state survey, which is a measure of manufacturing conditions in the NY region. As such, we feel that the data can be traded proactively or reactively. For those who choose to wait, if the Philly Fed index rises to 24 or higher, USD/JPY can be bought for an extension higher. If the Philly Fed index falls to 12 or lower, USD/JPY can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

99.00 still not taken
98.00 now support
A break higher open a run to 100.00

USD/JPY push higher but still unable to breach 99.00 level. A take out of that handle the pair could push towards 100.00 on momentum flows.

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