Top 5 – 08.12.13

*Top 5 Archive Members Only Top 5


DATE: Monday August 12, 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 – New Zealand Food Prices

Food Prices expected @ (5:45 PM ET / 21:45 GMT)
Our View – Neutral
Reason – Neutral
If Food Prices grow by 3% or more = Buy NZD/USD
If Food Prices rise by less than 1% = Sell NZD/USD

New Zealand is a soft commodity or food producing nation which makes the country’s growth particularly sensitive to commodity and food prices. So if there is a large enough surprise in Sunday’s food price report, the NZD/USD could react. The only opportunity in our opinion is to trade the data reactively. If food prices grow by 3% or more, we expect the NZD/USD to rally. If food price rise by less than 1%, we expect the NZD/USD to fall. REACTIVE TRADE


8100 continues to contain
8000 now support
Break higher opens run to 8250

8100 continued to contain the kiwi as that barrier remains stiff resistance, but a break higher opens the run to 8250.

2. USD/JPY – Japanese Q2 GDP

Q2 GDP expected @ 0.9% (7:50 PM ET / 23:50 GMT)
Our View – Bullish JPY
Reason – Higher Trade and Retail Sales
If GDP growth is less than 0.5% = Buy USD/JPY
If GDP growth exceeds 1.5% = Sell USD/JPY

We have good reasons to believe that Japanese GDP growth accelerated in the second quarter because retail sales and trade increased. This leads us to believe that the data can be traded proactively or reactively. However for those who choose to wait, if GDP growth is less than 0.5%, USD/JPY can be bought for an extension higher. If GDP growth exceeds 1.5%, USD/JPY can be sold. PROACTIVE or REACTIVE TRADE


96.00 still holds
97.00 must be taken out to relive downside bias
Break of 96.00 opens test of 95.00
Downdraft slows

USD/JPY continues to hold at the 96.00 level but the pair needs to break above 97.00 to relieve the downside pressure. A break below 96.00 opens up a test of the key 95.00 support.

3. USD/DKK – Denmark Consumer Prices

CPI expected @ -0.1% (3AM ET / 7 GMT)
Our View – Neutral
Reason – Neutral
If CPI is less than -0.4% = Buy USD/DKK
If CPI exceeds 0.3% = Sell USD/DKK

The level of inflation is important for many countries, particularly those in Europe whose central banks are focused on price stability. In the case of Denmark, consumer prices dropped 2 out of the last 3 months. If CPI falls again, it may be difficult for the Danish central bank to argue that higher rates are needed. However if CPI increases, Denmark could raise rates again to support the currency, which has weakened significantly against the euro. Wholesale sales were flat in June, making this month’s release difficult to call and the data best traded reactively. If CPI declines by -0.4% or more, we expect USD/DKK to rise. If CPI growth exceeds 0.3%, we expect USD/DKK to fall. REACTIVE TRADE


5.5000 double bottom?
5.6500 next reistance
Break of 5.5000 opens run to 5.0000

USD/DKK may have set a double bottom at the 5.5000 level but the recovery faces resistance at 5.6500 and a break below the key support could open a run to 5.0000

4. USD/TRL – Turkey Industrial Production

Industrial Production expected @ (3 AM ET / 7 GMT)
Our View – Neutral
Reason – Neutral
If Industrial Production falls by 1% or more = Buy USD/TRL
If Industrial Production is flat or increases = Sell USD/TRL

Industrial production numbers are scheduled for release from Turkey on Monday morning. Unfortunately the data is difficult to handicap and best traded reactively in our opinion. If industrial production drops by 1% or more, we expect USD/TRL to rise. If it is flat or increases, we expect USD/TRL to fall. REACTIVE TRADE


Possible Head and Shoulders formation
1.9000 key support
Break opens run to 1.8600

USD/TRY is in the midst of forming a head and shoulders and a break of the key 1.9000 support could trigger a move all the way to 1.8600

5. EUR/CHF – Swiss Retail Sales

Retail Sales expected @ (3:15AM ET / 7:15 GMT)
Our View – Neutral
Reason – Neutral
If Retail Sales growth is less than 1% = Buy EUR/CHF
If Retail Sales exceeds 3% = Sell EUR/CHF

Swiss retail sales are scheduled for release tomorrow. Consumer spending is the backbone of every economy including Switzerland’s which is why tomorrow’s economic report can have a significant impact on the Swissie. However, the country does not release economic data often, making it difficult to forecast a surprise. Therefore we feel that it is best to wait for the data to be released before taking a trade. If retail sales growth is less than 1%, EUR/CHF should extend its gains. If it exceeds 3%, we could see a sharp retracement in the currency pair. REACTIVE TRADE


2300 holds
Base forming
A break higher puts 2450 back in view

EUR/CHF continues to consolidate at the 1.2300 level as the base forms providing support for another up leg. A break above 1.2350 opens another run at 1.2450.