TOP 5 HOT IDEAS

DATE: Wednesday June 26, 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. EUR/CHF – UBS Consumption Indicator

FUNDAMENTALS
UBS Consumption Indicator @ (2AM ET / 7GMT)
Our View – Neutral
Reason – Neutral
If UBS Consumption Indicator is less than 1.00 = Buy USD/CHF
If UBS Consumption Indicator exceeds 2.00 = Sell USD/CHF

Switzerland’s economic calendar is generally very light but there are a handful of releases worth watching and this includes the UBS Consumption indicator, a measure of demand. Unfortunately the data is difficult to handicap and therefore best traded reactively and only if there is a meaningful surprise. If the index drops to 1.00 or lower, USD/CHF can be bought for an extension higher. If it is rises to 2.00, USD/CHF can be sold. REACTIVE TRADE

TECHNICALS


2200 supports
2300 caps
Consolidation continues

EURCHF remains in a consolidation pattern but 1.2200 is proving to be good support with 1.2300 near term resistance holding the pair in low volatility range.

2. EUR/USD – German GfK Confidence

FUNDAMENTALS
GfK Consumer Confidence expected @ 6.5 (2AM ET / 7GMT)
Our View – Bullish EUR
Reason – Stronger ZEW and IFO
If GfK exceeds 6.8 = Buy EUR/USD
If GfK is less than 6.2 = Sell EUR/USD

We have good reasons to believe that German consumer confidence increased in the month of July because German businesses and investors grew more optimistic this month. While there are still signs of weakness, the latest data shows that Germany continues to chug along which should bode well for consumer confidence. As a result, we believe that the GfK survey can be traded proactively or reactively. For those who choose to wait, if the GfK index exceeds 6.8, we expect the EUR/USD to rise. If the index falls to 6.2 or lower, we expect the EUR/USD to fall. PROACTVE or REACTIVE TRADE

TECHNICALS


3050 continues to hold
3150 caps for now
Still holds lows

Although the EUR/USD continues to drift lower on a longer term time frame it still is making higher lows with 3050 holding for now, while 3150 is key resistance to upside

3. GBP/USD – Chart of Fun

FUNDAMENTALS

There are no fundamental economic reports scheduled for release from the U.K. but given all of the questions that we have had about the GBP/USD recently, we thought it would be interesting to share the chart and technical today.

TECHNICALS

5300-5400 corridor continues to hold
5500 still caps
Break of 5500 opens retest of 5700

Cable has found support in the 5300-5400 corridor and appears ready to make a run the 5500 level, but it is proving to be stiff resistance. A retake of that figure would suggest that the correction is over and puts 5700 in view.

4. USD/JPY – Final Q1 GDP

FUNDAMENTALS
GDP expected @ 2.4% (8:30 AM ET / 12:30 GMT)
Our View – Neutral
Reason – Neutral
If GDP is revised up to 2.5% = Buy USD/JPY
If GDP is revised down to 2.2% = Sell USD/JPY

No revisions are expected to made to the U.S.’ final GDP numbers. However if they are, it should have a meaningful impact on USD/JPY. If GDP is revised up to 2.5% or higher, we expect USD/JPY to rally. If GDP is revised down to 2.2% or lower, we expect USD/JPY to sell off. REACTIVE TRADE

TECHNICALS


Rebounds off 97.00
99.00 still caps
Consolidation continues

USD/JPY recovered off the 97.00 level but could not penetrate 98.00 in North American trade. On longer time frame the 99.00 still remains the key cap on the upside.

5. AUD/USD – Chart of Fun

FUNDAMENTALS

There are no fundamental economic reports scheduled for release from the U.K. but given all of the questions that we have had about the AUD/USD recently, we thought it would be interesting to share the chart and technical today.

TECHNICALS


9300 caps recovery
9150 still spike support
Break of 9300 opens up run towards 9500

The Aussie held it ground in contained trade today but 9300 proved to be tough resistance to penetrate for now. The pair continues to base off the 91.50 spike support and a retake of 9300 could put 9500 back in view.