Top 5 10.21.13

TOP 5 HOT IDEAS

DATE: Monday Oct 21, 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. 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 -3% 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, reflecting a turnaround in prices, the GBP/USD can be bought for a move higher. If House Prices drop by -3% or more, the GBP/USD can be sold. REACTIVE TRADE

TECHNICALS

Retest of 6250?
6000 now support
Break above opens run to 6400

Cable looks to be headed for a test of the double top at 6250 with a break there opening up a run to 6400. Meanwhile 6000 is now support.

2. NZD/USD – Credit Card Spending

FUNDAMENTALS
Credit Card Spending expected @ (10 PM ET / 2 GMT)
Our View – Neutral
Reason -- Neutral
If Credit Card Spending rises by 3% or more = Buy NZD/USD
If Credit Card Spending falls by -3% or more = Sell NZD/USD

New Zealand credit card spending is not a huge market mover for the NZD/USD unless there is a big surprise. Therefore the data is best traded reactively. If credit card spending rises by 3% or more, the NZD/USD can be bought for a move higher. If credit card spending falls by 3% or more, the NZD/USD can be sold. REACTIVE TRADE

TECHNICALS

8500 taken
Range breaks to upside
8600 next target for longs

Kiwi has broken its long held range of 8300 to the upside running to 8500. A break there opens a run to test the long held resistance at 8600.

3. EUR/USD – German Producer Prices

FUNDAMENTALS
PPI expected @ 0.1% (2 PM ET / 6 GMT)
Our View – Bullish EUR
Reason – Sharp Rise in Wholesale Prices
If GE PPI rises by 0.4% or more = Buy EUR/USD
If GE PPI declines by -0.3% or more = Sell EUR/USD

We have strong reasons to believe that German producer prices increased in the month of September because wholesale prices, which measure a similar subset of goods jumped 0.7% after falling 0.6% the previous month. As a result, we believe that the data can be traded proactively or reactively. For those who choose to wait, if producer prices rise by 0.4% or more, the EUR/USD can be bought for a move higher. If PPI declines by 0.3% or more, the EUR/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

3700 touched but not held
3500 now support
3750 opens fresh highs

The euro touched the 3700 figure but failed to take it out not yet breaking the yearly highs. A break above 3750 put it on track for new yearly highs.

4. USD/CAD – Wholesale Sales

FUNDAMENTALS
Wholesale sales expected @ (8:30 AM ET / 12:30 GMT)
Our View – Neutral
Reason – Neutral
If Canadian wholesale sales drops by -3% or more = Buy USD/CAD
If Canadian wholesale sales growth exceeds 0.5% = Sell USD/CAD

Canadian wholesale sales are not a huge market mover for the Canadian dollar unless there is a big surprise but it can be an important indicator of spending behavior. Yet the data can only be traded reactively. If Canadian wholesale sales drop by -3% or more, USD/CAD can be bought for a move higher. If wholesale sales growth exceeds 0.5%, USD/CAD can be sold. REACTIVE TRADE

TECHNICALS

1.0200 still contains downside
1.0350 caps upside
Break below opens run to 1.0100

Loonie remains contained on the downside to 1.0200 as the bottom still holds. Meanwhile 1.0350 caps the upside for now.

5. USD/JPY – Existing Home Sales

FUNDAMENTALS
Existing Home Sales expected @ -3.3% (10 AM ET / 14 GMT)
Our View – Neutral
Reason – Neutral
If Existing Home Sales grow by 1% or more = Buy USD/JPY
If Existing Home Sales drop by 5% or more = Sell USD/JPY

The existing home sales report is usually one of the first pieces of U.S. housing data released each month and can therefore be difficult to handicap. Yet given a large enough surprise it can have a meaningful impact on USD/JPY and should be traded reactively. If existing home grow by 1% or more, we believe that USD/JPY can be bought for a move higher. If Existing Home Sales drop by 5% or more, we believe that USD/JPY can be sold. REACTIVE TRADE

TECHNICALS

97.00 holds
99.00 now stiff resistance
Break of 97.00 opens run o 95.00

USD/JPY has been rejected of 98.00 but for now the 97.00 hold support. If broken the downdraft could accelerate to 95.00

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