Profit Mongers @ 1:20 AM, Monday August 09 2010
Hey folks,
On the EUR/USD, the 1.3250 high I called early last week held for awhile and showed some signs of turning over, but eventually gave way Friday to new highs. Now the question is, do we trade the price (short it because it's very overbought and due for a decline), or do we trade the momentum (obviously holding bullishly). It comes down to a question of timeframes. Right now trading shorter term, a momentum trade long looks good from here (1.3288 as I type) as long as we hold above 1.3200 and especially if we hold above 1.3260. Longer term I'm still on the lookout to position for a short since this bounce is so overstretched.
On USD/JPY, we did approach the 85.00 handle and I had mentioned a few times where may be deep bids there and a buy near 85.00 should yield a great short term buy. Well, we hit a low Friday of 85.02 and have rallied 50 pips so far, so if you managed to get filled with an order near 85.00, I'm sure you did nicely. Looking forwards, a subsequent retest of the area near 85.00 should see similar results, but maybe less high of a bounce, so try another limit long down there with a 20-30 point TP.
Stocks remain in a consolidation phase consistent with a potential top in this region. I plan to maintain a short position as discussed in various signals last week.
In regards to news Friday, I have to apologize I mixed up a minus sign in my signal and reported somewhat bogus triggers for NFP. All worked fine and the negative number was still a good sell, but it raised a bit of a stink and I should have QA'd my final edit before posting it. I actually wasn't around to trade NFP Friday (Real life stuff), so I didn't have a chance to notice the error later.
Anyhow, CAD Employment came out ALMOST low enough to hit our sell trigger, and because of the borderline signal, we only saw 45 pips up with little follow-thru afterwards. NFP came out low with a lower revision to last month's number, and Unemployment Rate was only better than expected by 0.1%, so it was almost all bad news. USD/JPY responded by dropping 65 pips in the first minute, and another 45 over the next half hour. A pretty straightfoward move. It then started running into support ahead of 85.00 which has been an obvious support level as discussed earlier. Nothing crucial is due out for release Monday, but Tuesday will see the FOMC Interest Rate Statement which we'll preview tomorrow. Until then!
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