Aspenalysis: Simple To Follow FX Trade Ideas

Traders, the existing thread we have here at FF deals mainly with the process behind our IPA Trade Methodology

http://www.forexfactory.com/showthread.php?t=330801

With that said, not all traders are interested in getting involved in the actual process of trade selection, but would just rather get the final output so they can quickly evaluate whether or not they want to take the trade.

So, starting today, we will offer up some actionable 'Trade Ideas' in the FX market. We will kick off the first post with a long consideration in USD/NOK. First, do not freak out about a pair that is not EUR/USD - who cares what the pair or cross is, as long as it moves! With oil prices weak and the technical pattern solid in USD/NOK, we like longs in here. (NOTE: pip values on this pair are only .17 per mini lot and 1.70 per stand lot.)

http://www.aspentrading.com/uploaded...12nok30min.png

http://www.aspentrading.com/uploaded...12oil60min.png

Here is today's short-term outlook/trade idea:

http://www.aspentrading.com/uploaded...12eur15min.png

Just a talking head alert - Aspen's big media cheese, Todd Gordon, will be on CNBC Fast Money at 12:30 PM EST today talking about yesterday's USD/NOK chart

Just booked partial profits at 5.8438 in USD/NOK - the 1350 level in the S&P's is key and was the catalyst for making the adjustment.

We re-established another piece to the USD/NOK long yesterday afternoon but are watching current levels real close. We need to see a decisive break below 1345 in the S&P futures if we are to see USD/NOK trade higher into our 5.8600 and 5.8800 target levels.

Failure to break below 1345 will likely force us to start booking profits in USD/NOK - keeping a tight leash in here. -DF-

A real street fight here at 1350 - S&P pits must be real interesting here. If prices can remain below 1350 USD/NOK should kick nicely higher while EUR/USD should look towards 1.2875 as min target.

Does not get more basic/simple than that - weak equities allows for easy pips in USD/NOK and EUR/USD - no reason to not have been on board.

Traders, GBP/USD has held in pretty well during the recent push lower in the S&P's. Additionally, the EW count is pretty solid. So, if we are to assume that the S&P's are beginning to carve out a low into this 1340/10 area and then push higher - GBP/USD should be a good one to jump on.

It will require some patience and perhaps even scaling into the trade as we do not have confirmation that today's lows in the S&P's are the true lows of this move. Either way, some clients will see some value in the set-up noted below.

http://www.aspentrading.com/uploaded...12gbp90min.png

The following commentary pertains to the previous posting on GBP/USD:

Traders, GBP/USD continues to push nicely higher and with the S&P's catching a bid that certainly adds to the momentum.

Bear in mind however, yesterday's lows at 1343 in the S&P may not have been the Wave 4 lows. The first count below is the one that we are favoring and would suggest that the 'risk on' trade is back.

The second count merely delays a sustained risk on trade thus leaving GBP/USD vulnerable to a pull-back of some degree. It just depends on how you manage your trades - are you a hit and run type trader, or do you try to milk the trend and ride out the inevitable pull-backs?

http://www.aspentrading.com/uploaded...May_10/spB.png

http://www.aspentrading.com/uploaded...May_10/spA.png

S&P's looking heavy - looks like another leg lower per a modified Scenario #2 shown above. We just advised clients to not be afraid to book partial profits in GBP/USD if S&P's remain weak below 1367 - you can always re-load GBP/USD longs at better levels.

Hey traders, I wrote a little bit of an editorial today for or clients that was largely void of charts, but laid out some key talking points for the markets - it appears below:

Good morning traders/Aspenites. Markets continue to digest the break lower on Wednesday, which is normal, but this is merely the calm before a full return to volatility. Consider this: while the lows set on Wednesday at 1343 in the S&P's satisfy one of the minimum downside targets we had set out over the last week or two we do not believe it is the start of a sustained push lower - just the opposite. The whole 1340/10 support zone is likely the area in which a larger degree Wave 4 will complete and markets will move briskly higher from there. That, to us, is where the volatility will come in - markets break lower from current levels, all the reactionary traders/investors pile in and just like that - markets reverse. We will be on board this train should that scenario play out, if so, we will kill it here in May.

http://www.aspentrading.com/uploaded....12sp60min.png

This forecast of course discounts some of the poor economic/political news that continues on a day-to-day basis, but that is what markets do. One thing I learned, the hard way, is to never underestimate the central banks. While any rational person could conclude that things in Europe could get worse still and thus drag markets lower, investors/traders have come to expect a rescue in the form of 'easy money' from central banks. This of course is rocket fuel for the bulls and to not factor in that possibility would be foolish. Consider this, the ECB, unlike the Fed, does not have the ability to print money, everything they have done thus far has been based on rates and other quantitative measures. However, dire times call for dire measures and we should never rule out what politicians will do. If austerity has already been kicked to the side who says that that the ECB cannot alter policy and drag out the printing press? The quote below from John Taylor at FX Concepts sums it up nicely:

"At the same time, as a manager of corporate risk and an absolute return manager, I have to be ready for the government intervention that is sure to come. As you might guess, we are not too optimistic about the Eurozone authorities’ chances of final success, but the bad news will continue and eventually they will do something dramatic. The road to hell is paved with good intentions of governments, but they make for a volatile ride."

The reality currently is that the patient has largely been stabilized since the financial crisis but the fact is, it was, and continues to be a big mess. There are subtle signs that the purging of the excess' is still at hand. Uncertainty breeds volatility and as John Taylor goes on to say, "interest rates are at zero, fiscal budgets are stretched to the maximum, total national financial liabilities are at a breaking point and national monetary bases are a multiple of the highest they have ever been. Quite simply, there are no good borrowers. No one wants to loan anyone any money. Fiscal consolidation must be carried out, and that tends to mean recession and loss of wealth, which will negatively impact financial markets."

We must be careful not to position on this theme, but keep it in the back of our mind and overlay it on top of the EW forecast - not the other way around. This reduces the possibility of being surprised by the market - never a fun thing cause the joke is nearly always on you. In the end, this may sort itself out with hardly wimper - there is no way to know. As we always say: trade what you see; not what you think. Adhere to those words and you will keep yourself out of trouble for the most part and live to trade another day. -DF-

Shorts in AUD/JPY?

http://www.screencast.com/t/arLIjAr0aR

Per the last post on Friday (see above) AUD/JPY remains weak and is likely to carve out lower levels still. With the S&P's under pressure likely towards 1320/10, AUD/JPY will continue to offer good short set-ups.

http://www.aspentrading.com/uploaded...DJPY_30min.png

Short-term count on EUR/USD:

http://www.aspentrading.com/uploaded...10minchart.png

'Risk on' or 'risk off'? The S&P's are suggesting 'risk on':

http://www.aspentrading.com/uploaded...12spCount1.png

Given the way the S&P futures are trading in the pre-market, the S&P's will open above 1335 and thus suggest that Wave 4 is complete and prices will move briskly higher. This reversal in prices of course should not come as a suprise - it was merely a function of where the bottom would ultimately fit in - is looks increasingly likely we will have an answer very soon.

Join Aspen's Trader Education Series with "Characteristics of Major Currencies" @ 4:30PM ET Today. In this FREE 30 minute Director of Client Education, Bart Marek will unveil the trading charteristics & considerations of trading specific currencies. Join us and learn the difference between trading USD vs AUD or GBP and more.

Register here: https://www3.gotomeeting.com/register/545966254

While the S&P's continue to trade higher, AUD/JPY is having nothing to do with it. This is a key sign. If the risk-off theme resumes, the Wave iv resistance level at 79.18 (max of 79.36) should hold and prices will quickly push lower to the target zone noted in the chart below.

http://www.aspentrading.com/uploaded...djpyTARGET.jpg

S&P futures under pressure and AUD/JPY is off 50 pips since the original posting

Within 25/30 pips now of the target area laid out here yesterday - 150 pips - hope traders caught it.

Aspen Trading Group Nightly Video Update: Shorts in EUR/GBP

http://www.screencast.com/users/Aspe...6-d69bf8d2ce7b