I posted a more detailed analysis on my "$ For the Week of 10/30" thread, but since I believe so strongly in this trade, I wanted to make a seperate thread.
My own opinion is that based on the Fed statement last Wed, we're very likely to see a lower the consensus reading here (.1 vs .2). I'll change my opinion on a dime however if a large sell-off is seen in the EURO and/or GBP in the London or early NY sessions tomorrow. To my thinking, all this long money is not going to stay in the market if they're worried about an inflationary reading. In fact, I believe the only way a big sell-off would occur is if a hot rumor starts to circulate among traders. We definately could see some profit taking (maybe down to around 20-40 in the GBP), but if a bottom holds that will also be a great place to get long thru the announcement.
If no profit taking is seen, or if buying continues, that means to me that the long money is absolutely convinced of a $ neg reading. You can't let it get too far ahead, so if buying is seen, you'll have to get in if you want to trade this.
After the announcement, assuming you're profitable, as after the GDP on Friday you'll have to watch this carefully and take profits accordingly; a round of profit taking might be seen. That didn't really happen Friday as cable breifly touched 9000 before settling back inthe 80's. Could happen after this one so watch for it.
A reading of .1 or lower could set up a scenario similar to what we've seen many times. A nice pop up, followed by some profit taking, followed by a re-newed round of buying. The BoE is still tipped to be raising, the Fed isn't and in my mind that signals no better time to buy.
My own opinion is that based on the Fed statement last Wed, we're very likely to see a lower the consensus reading here (.1 vs .2). I'll change my opinion on a dime however if a large sell-off is seen in the EURO and/or GBP in the London or early NY sessions tomorrow. To my thinking, all this long money is not going to stay in the market if they're worried about an inflationary reading. In fact, I believe the only way a big sell-off would occur is if a hot rumor starts to circulate among traders. We definately could see some profit taking (maybe down to around 20-40 in the GBP), but if a bottom holds that will also be a great place to get long thru the announcement.
If no profit taking is seen, or if buying continues, that means to me that the long money is absolutely convinced of a $ neg reading. You can't let it get too far ahead, so if buying is seen, you'll have to get in if you want to trade this.
After the announcement, assuming you're profitable, as after the GDP on Friday you'll have to watch this carefully and take profits accordingly; a round of profit taking might be seen. That didn't really happen Friday as cable breifly touched 9000 before settling back inthe 80's. Could happen after this one so watch for it.
A reading of .1 or lower could set up a scenario similar to what we've seen many times. A nice pop up, followed by some profit taking, followed by a re-newed round of buying. The BoE is still tipped to be raising, the Fed isn't and in my mind that signals no better time to buy.