Top 5 12.23.13

*Top 5 Archive Members Only Top 5


DATE: Monday Dec 23, 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/SGD – Singapore Consumer Prices

CPI expected @ 0.9% (0 AM ET / 5 GMT)
Our View – Neutral
Reason – Neutral
If CPI growth is 0.2% or less = Buy USD/SGD
If CPI growth exceeds 1.3% = Sell USD/SGD

Singapore’s consumer price report is due for release on Monday and the data is best traded reactively. Inflationary pressures are expected to increase and if economists are right and CPI rises by 1.3% or more, we expect USD/SGD to sell-off. If CPI growth is less than 0.2%, we expect USD/SGD to rise. REACTIVE TRADE


USD/SGD has been in a very strong uptrend but prices are failing right at the 61.8% Fibonacci retracement of the August to October sell-off. If the currency pair does not manage to close above 1.27, it is vulnerable for drop to the 50% Fib and former breakout point at 1.26. If it extends higher, there could be some resistance at 1.2750.

2. EUR/USD – German Import Prices

German Import Prices expected @ -0.1% (2 AM ET / 7 GMT)
Our View – Neutral
Reason – Neutral
If import prices grow by 0.5% or more = Buy EUR/USD
If import prices drop by -1% or more = Sell EUR/USD

With inflationary pressures in the region muted, German import prices are also not expected to have a large impact on the euro unless there is a sizeable surprise. Therefore this report should only traded reactively and if it exceeds our parameters. If import prices grow by 0.5% or more, the EUR/USD can be bought for a move higher. If import prices drop by 1% or more, the EUR/USD can be sold. REACTIVE TRADE


EUR/USD has been turn mode since failing at 1.38. Support is now at 1.36, the 50-day SMA and below there, 1.35, where the second standard deviation Bollinger Band sits. If EUR/USD starts to recover, the October high of 1.3830 which also happens to be the 61.8% Fibonacci retracement of the 2011 to 2012 sell-off will be the key resistance.

3. EUR/CHF – UBS Consumption Index

UBS Consumption Indicator @ (2AM ET / 7GMT)
Our View – Neutral
Reason – Neutral
If UBS Consumption Indicator is less than 1.10 = Buy EUR/CHF
If UBS Consumption Indicator exceeds 1.50 = Sell EUR/CHF

Switzerland’s economic calendar is generally very light but there are a handful of economic releases worth watching month to month and this includes the UBS Consumption indicator which is a measure of demand. Unfortunately the data is difficult to handicap and best traded reactively only on a meaningful surprise. If the index drops to 1.10 or lower, EUR/CHF can be bought for an extension higher. If it is rises to 1.50, EUR/CHF can be sold. REACTIVE TRADE


The rally in EUR/CHF looks like a dead cat bounce. There is major resistance above current levels at 1.2310, where the 100-day and 200-day SMA converge. 1.22 is near term support but the swing low of 1.2167 is the key level to watch.

4. USD/CAD – Canadian GDP

Oct GDP expected @ 0.1% (8:30 AM ET / 13:30 GMT)
Our View – Neutral
Reason – Weaker Retail Sales, Stronger Trade
If GDP stagnates or declines = Buy USD/CAD
If GDP growth exceeds 0.5% = Sell USD/CAD

The 2 main components of GDP are retail sales and trade and while spending improved in October, trade activity in Canada weakened. As such, we feel that the data can only be traded reactively. If GDP stagnates or declines, USD/CAD can be bought for a move higher. If GDP growth exceeds 0.5%, USD/CAD can be sold. REACTIVE TRADE


Friday’s ugly reversal candle in USD/CAD points to further losses for the pair. The current move should extend to the first standard deviation Bollinger Band at 1.0575 and a break below the December low of 1.0560 would open the door for a stronger sell-off to 1.05. However if USD/CAD manages to regain its upside momentum, its 3 year high of 1.0737 is key resistance and above there the 2010 high of 1.0854.

5. USD/JPY – Personal Income and Personal Spending

Personal Income & Personal Spending expected @ 0.5% (8:30 AM ET / 13:30 GMT)
Our View – Bullish USD
Reason – Rise in average hourly earnings and retail sales
If Personal Income AND Spending exceeds 0.8% = Buy USD/JPY
If Personal Income AND Spending grows by 0.2% or less = Sell USD/JPY

We have good reasons to believe that this month’s personal income and spending numbers will surprise to the upside because average hourly earnings and spending increased. As a result, the data can be traded proactively or reactively. For those who choose to wait, if personal income and spending exceeds 0.8%, USD/JPY can be bought for a recovery trade higher. If personal spending and income grows by less than 0.2%, USD/JPY can be sold. PROACTIVE or REACTIVE TRADE


USD/JPY is in a very strong uptrend according to our double Bollinger Bands. 105 is an important psychological resistance level that the pair could find difficult to break but the key resistance level is 105.70, the 61.8% Fibonacci retracement of the 2007 to 2011 sell-off. Support on the other hand is at the trendline of 103 and more significantly the December lows of 101.60.