Top 5 – 11.18.13

TOP 5 HOT IDEAS

DATE: Monday, Nov 18, 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 – PMI Services



FUNDAMENTALS
Business NZ Services expected @ (4:30 PM ET / 21:30 GMT)
Our View – Bullish NZD
Reason – Stronger PMI Manufacturing and Credit Card Spending
If PMI Services exceed 58 = Buy NZD/USD
If PMI Services drop to 52 or lower = Sell NZD/USD

New Zealand PMI services is scheduled for release on Sunday and given that the RBNZ has grown more hawkish and retail sales increased we have good reasons to believe that service sector activity accelerated. As such we feel this report can be traded proactively or reactively. If the PMI Services index exceeds 58, the NZD/USD can be bought for a move higher. If the index drops to 52 or lower, NZD/USD can be sold. REACTIVE TRADE

TECHNICALS

8400 caps upside
8300 near term support
Recovery may stall

The recovery in kiwi continues but it may face tougher resistance at the 8400 level where there is considerably more overhead. Meanwhile 8300 supports near term.

2. GBP/USD – Rightmove House Prices

FUNDAMENTALS
Rightmove House Prices expected @ (7:01 PM ET / 00:01 GMT)
Our View – Neutral
Reason – Neutral
If House Prices grow by 3.5% or more = Buy GBP/USD
If House Prices grow by 2% or less = 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 3.5% or more, the GBP/USD can be bought for a move higher. If House Prices grow by 2% or less, the GBP/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

6100 taken out
6150 next target of longs
6000 now support

Cable has been acting very well as the week progressed and the move through 6100 now puts 6150 squarely in view, while 6000 is now the new support.

3. EUR/USD – Eurozone Current Account Balance

FUNDAMENTALS
EZ Current Account Balance expected @ (4 AM ET / 9 GMT)
Our View – Bullish EUR
Reason – Larger German Current Account Surplus, Marginal Weaker French CA Deficit
If EZ Current Account Balance exceeds 20B = Buy EUR/USD
If EZ Current Account Balance is less than 15B = Sell EUR/USD

We have good reasons to believe that the Eurozone’s current account surplus increased in the month of September. Whenever we look to handicap EZ data we always turn to the reports of its 2 largest economies – Germany and France. In September Germany reported a larger current account surplus and France reported a slightly larger current account 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 15B, the EUR/USD can be sold. PROACTIVE or REACTIVE TRADE

TECHNICALS

3500 still stalls the move
3400 remains support
3550 provides stiffer resistance

EUR/USD rally remains in place but 3500 continues to caps the move so far and the pair needs to clear that level in order to make a run at the bigger resistance t 3550 level.

4. USD/CAD – International Securities Transactions

FUNDAMENTALS
International Securities Transactions expected @ (8:30 AM ET / 13:30 GMT)
Our View – Neutral
Reason – Neutral
If Int’l Securities Transactions is flat or declines = Buy USD/CAD
If Int’l Securities Transactions exceed 4B = Sell USD/CAD

Canada’s International Securities Transaction report is not a huge market mover for the Canadian dollar unless there is a big surprise. As a result, the data is best traded reactively. If Int’l Securities Transactions is flat or declines, USD/CAD can be bought for a quick move higher. If Int’l Securities Transactions exceed 4B, USD/CAD can be sold. REACTIVE TRADE

TECHNICALS

1.0500 top holds
1.0400 still support
Range remains in place.

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

5. USD/JPY – Treasury International Capital Flow Report

FUNDAMENTALS
Net Long Term Treasury International Capital flow expected @ 20B (9AM ET / 14 GMT)
Our View – Neutral
Reason – Neutral
If TIC exceeds $30B = Buy USD/JPY
If TIC is less than $10B = Sell USD/JPY

The Treasury International Capital flow is scheduled for release on Monday and the data is difficult to predict. Therefore we feel that it can only be traded reactively. If demand for dollars exceeds $30B in September, USD/JPY can be bought for a move higher. If net long term Treasury Capital flow is less than $10B, USD/JPY can be sold. REACTIVE TRADE

TECHNICALS

Holds above 100.00
100.50 next target of longs
99.00 still support

USD/JPY has held above 100.00 level which a bullish sign but the pair needs to take out 100.50 in order to accelerate its run towards the yearly highs near the 103.50 level.

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