Top 5 11.14.13

TOP 5 HOT IDEAS

DATE: Wednesday Nov 14, 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. USD/JPY – Japanese Q3 GDP



FUNDAMENTALS
Japanese GDP expected @ 0.4% (6:50 PM ET / 23:50 GMT)
Our View – Neutral
Reason – Weaker Trade Activity, Stronger Retail Sales
If GDP growth is 0.2% or less = Buy USD/JPY
If GDP growth exceeds 0.9% = Sell USD/JPY

Japanese Q3 GDP numbers are scheduled for release tomorrow and while this report could be a big market mover for the JPY, it is difficult to handicap. The 2 most important components of GDP are trade and retail sales but in the third quarter, the trade balance deteriorated while retail sales growth increased. As a result, we feel this data is best traded reactively. If GDP growth is less than 0.2%, we expect USD/JPY to move higher. If GDP growth exceeds 0.9%, we expect USD/JPY to fall. REACTIVE TRADE

TECHNICALS

Stalls ahead of 100.00
99.00 support
Break opens test of 98.50

USD/JPY has stalled ahead of the key 100.00 level and has retreated below 99.50 with 99.00 now key support. A break above 99.80 opens run to 100.00. A break of 99.00 could start a deeper correction towards 98.00.

2. EUR/USD – German Q3 GDP

FUNDAMENTALS
German GDP expected @ 0.3% (2 AM ET / 7 GMT)
Our View – Neutral
Reason – Weaker Retail Sales, Stronger Trade
If GDP growth exceeds 0.7% = Buy EUR/USD
If GDP growth is 0.1% or less = Sell EUR/USD

German Q3 GDP numbers are scheduled for release tomorrow and while this report may be a big market mover for the EUR, it is difficult to handicap. The 2 most important components of GDP are trade and retail sales but in the third quarter, the trade balance deteriorated while retail sales growth increased. As a result, we feel that this data is best traded reactively. If GDP growth exceeds 0.7%, we expect the EUR/USD to extend higher. If GDP growth is 0.1% or less we expect the EUR/USD to weaken. REACTIVE TRADE

TECHNICALS

Intra vol but upside remains
3500 in view
3400 still key support

The EUR/USD saw major intra day volatility but the pair maintains its upside bias with 3500 in view while 3400 is still key support to the donwside.

3. GBP/USD – UK Retail Sales

FUNDAMENTALS
Retail Sales expected @ 0.0% (4:30 AM ET / 9:30 GMT)
Our View – Neutral
Reason – Small rise in BRC retail sales and drop in confidence
If Retail Sales grow by 0.6% or more = Buy GBP/USD
If Retail Sales falls by -0.1% or more = Sell GBP/CAD

The U.K. retail sales report is a very important release for the British pound but unfortunately this month’s release is a tough call and should therefore only be traded reactively. The reason is because the British Retail Consortium reported a small increase in demand but consumer confidence declined. If retail sales grow by 0.6% or more, the GBP/USD can be bought for an extension higher. However if retail sales drop by 0.1% or more, the GBP/USD can be sold. REACTIVE TRADE

TECHNICALS

6000 retaken
6100 in view
5950 new support

Cable had its best day in more than a month retaking the 1.6000 level and reestablishing an upward bias. 6100 is the next target of longs while 5950 is the new support.

4. USD/CAD – Canadian Trade Balance

FUNDAMENTALS
Trade Balance @ -1.0B (8:30 AM ET / 13:30 GMT)
Our View – Bullish
Reason – Higher IVEY PMI
If trade deficit exceeds -1.5B = Buy USD/CAD
If trade balance is -0.5B or better = Sell USD/CAD

We have good reasons to believe that Canada’s trade balance narrowed in the month of September because manufacturing conditions improved according to that month’s IVEY PMI index. Therefore we feel the data can be traded proactively or reactively. For those who choose to wait, if Canada’s trade deficit exceeds -1.5B, USD/CAD can be bought for a quick move higher. If the trade balance is -0.5B or better, USD/CAD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

1.0500 proves resistance
1.0400 still support
Range remains in place.

USD/CAD remains rangebound but 1.0500 is proving to be very stiff resistance and the pair looks to be headed for a retest of the 1.0400 support.

5. USD/JPY – US Trade Balance

FUNDAMENTALS
Trade Balance expected @ -$39.0B (8:30 AM ET / 13:30 GMT)
Our View – Neutral
Reason – Rise in ISM Manufacturing index, new orders increased but export orders dropped
If Trade deficit is smaller than -$37B = Buy USD/JPY
If Trade deficit exceeds -$42B = Sell USD/JPY

Given the improvement in the ISM manufacturing index, we have good reasons to believe that the U.S. trade balance narrowed in the month of September. Therefore we feel that the data can be traded proactively or reactively. If the Trade deficit is smaller than -$37B, USD/JPY can be bought for a move higher. If Trade deficit exceeds -$42B, USD/JPY can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

Stalls ahead of 100.00
99.00 support
Break opens test of 98.50

USD/JPY has stalled ahead of the key 100.00 level and has retreated below 99.50 with 99.00 now key support. A break above 99.80 opens run to 100.00. A break of 99.00 could start a deeper correction towards 98.00.

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