Profit Mongers @ 2:44 AM, Friday March 05 2010
Hey folks,
For some reason, my signal for yesterday on the FPA got deleted or never went up... not sure why... ah well.
The EUR/USD did end up pushing up through resistance yesterday, but has pulled back down into the range of the last couple weeks. Technically, I'm still short to medium term bullish EUR/USD. We saw a nearly exact 61.8% retracement to 1.3550, and I think there's a good chance we rally off of this level in advance of US NFP figures in the morning. More on this in the news discussion at the end of the signal though.
One other thing of note is increasing verbal intervention from Japan. Some talk from the Japanese government of expanding their war chest for currency intervention and deflation fighting has notably weakened the JPY and may continue for much more JPY weakness or potentially whipsaw around the other way if such talk is refuted by the BOJ. I'd find opportunities to get long on yen crosses and USD/JPY but bail if some conflicting news comes out of Japan.
Stocks are in the process of topping out and should see some resistance in the 1125-1130 range. I'm not taking any short term bets on stocks until they start a more confirmed move lower, but I do think stocks in general are very ripe for longer term shorts, especially at these levels right now.
In news Thursday, we saw no real tradable surprises out of the BoE or ECB interest rate decisions, but the CAD Ivey PMI delivered as usual with 45 pips up over 40 minutes, with an easy entry after the first minute within 10 pips of prerelease. In news Friday:
0830 US NFP and Unemployment Rate (-68K and 9.8% expected) - In order to trade safely, we'll want to see the bulk of the NFP surprise, revisions, and Unemployment Rate all coming in together better or worse than expected. Any drastic conflicts makes the trade a lot harder to predict. Typically though, the initial reaction will correspond to the NFP figures, and a sharp whipsaw will send things right back fairly soon if the Unemployment Rate numbers disagree. It's hard to say whether USD/JPY or EUR/USD will end up being the better trade, so I might recommend entering half positions on each to hedge your exposure.
The buzz is that there's a lot of downside risk to these numbers due to the extreme cold weather conditions seen in the U.S. during February. I think the USD may have a weak tone between now and the NFP release.
If NFP comes out above 0, with little or positive revisions to last month's number and unemployment rate at or below 9.8%, USD/JPY should rally 50+ pips quiclkly, and EUR/USD should fall 50+ pips.
If NFP comes out at -140K or lower with little or negative revisions to last month's number, and unemployment rate at or above 9.8%, USD/JPY should fall 50+ pips quickly and EUR/USD should rally 50+ pips.
That's all for today's update. If you'd like to learn more about trading or trade along with myself and my collegues, come join us at Profit Mongers. Our subscription is very reasonable at $179 per month, and right now you can sign up for a 2 week trial to get started for only $29. This offer is for new customers only. Feel free to email me with any questions at sirpipsalot@profitmongers.com
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