Forex Signal (Fri February 25 2011, 8:30am NY Time EST) - US Prelim GDP q/q

[Henry Liu]

Here’s the forecast for U.S. Prelim. GDP:

8:30am (NY Time) US Prelim GDP q/q Forecast 3.3% Previous 3.2%
ACTION: USD/JPY BUY 3.6% SELL 3.0%

The Trade Plan
Our main focus tomorrow will be on the second of three quarterly (Q3) release of U.S. GDP number (Prelim). We are looking for a minimum deviation of 0.3% on the forecasted figure of 3.3%. Therefore if we get a 3.6% on the Prelim 4th quarterly GDP, it would be US Dollar positive. We will BUY USD/JPY. However, if we get a 3.0% release or worse, then we would be SELLING USD/JPY or BUYING EURUSD. We’ll be looking to trade this release based on my Retracement Trading Method; since this is a high impact release, strong market volatility is expected immediately after the release.

We'll be trading this release using an after-news retracement method. For more information on my trading system:
Henry's news trading method

The Market
With Prelim GDP being the second GDP release of the three, it is usually ignored by the market. But with the possibility of revisions due to recent positive outlook, market will be paying attention to this release...

However, as stated in my previous analysis that the entire market is focused on the conflict in Libya, we may not see much reaction in the market unless we get our tradable deviation...

Additional Thoughts
US is the largest economy in the world and it’s GDP is a reflection of global economy. However, as stated before Prelim GDP being the second release, we are not likely to get any surprise, therefore be prepared that we may not get a trading opportunity from this release today.

Pre-news Considerations
I’d probably stay out of the pre-news market as I believe speculators are waiting for the FOMC minutes for direction...

DEFINITION:
“GDP, which is defined (from wikipedia) as “the market value of all final goods and services produced within a country in a given period of time. It is also considered the sum of value added at every stage of production of all final goods and services produced within a country in a given period of time.” GDP number has a direct effect on the Interest rate of the currency, it is one of the news indicators that affects FOMC’s decision directly.”

Historical Chart & Data For US Prelim GDP


Thanks,

 

[Johnass]

Etoro offers free dollars to fill your accounts

Hi Henry

Etoro has offered to add 25% to your account if you put funds in. this Establishment only does this when big moves are going to happen. I get the feeling our Isreali friends are in the know as they own this company . hopefully the usd will shoot up , Good luck tonight eveyone hope we all clean up big time and get next week off.

John

 

[PipDog]

How'd You Guys Do?

Not exactly working out as planned...again. I lost 3 pips. If I'd stayed in until now, it'd be more like 15 pips.

 

[Maluco]

Not exactly working out as planned...again. I lost 3 pips. If I'd stayed in until now, it'd be more like 15 pips.

Did you abort the trade? Sorry for your loss.. better a tiny loss then 15 pips plus.

The Middle East situation is messing up news trade as I realised.. there were lots of profit taking as well, as traders are are taking their chips off the table due the instability in Libya, Bahrein, Yemen and mainly Saudi Arabia.

 

[PipDog]

Took A Shot

Did you abort the trade? Sorry for your loss.. better a tiny loss then 15 pips plus.

The Middle East situation is messing up news trade as I realised.. there were lots of profit taking as well, as traders are are taking their chips off the table due the instability in Libya, Bahrein, Yemen and mainly Saudi Arabia.

I sold the USDJPY...and it really didn't react much to the news. I thought we'd see some bleeding...maybe 10-25 pips. Didn't happen. I could of stayed in the trad and made a few pips, but, without much of a reaction I just didn't want to take the risk. Sure glad I didn't decide to buy the EURUSD instead...that one is down significantly and was never up much.

So...the USD strengthens on bad GDP numbers. Maybe a little too much risk aversion right now to sell the USD.

 

[RahmanSL]

Don't tell me you guys didn't trade the AUD/USD today (25/Feb/2011)?????

It was moving up and down quite nicely....made a lot of clams on that pair.

Didn't do too well on USD/JPY though as it was moving too slowly for me and I lost interest.

 

[PipDog]

AUDUSD...Why?

Don't tell me you guys didn't trade the AUD/USD today (25/Feb/2011)?????

It was moving up and down quite nicely....made a lot of clams on that pair.

Didn't do too well on USD/JPY though as it was moving too slowly for me and I lost interest.

I see no reason to trade the AUDUSD, at least with respect to this news event. Sure...it goes up...it goes down...it goes up again...but that had little to do with the US GDP.

We were trading the US GDP. We got a .5 deviation, which, based upon historical data, should of created some negative movement in the USD, specifically against the Yen. It turned out that this is not what occurred. Sure...you could of bought the AUD, sold silver, went long on wheat futures...but, none of that matters to the subject news event.

What?????

 

[Boko Maru]

We were trading the US GDP. We got a .5 deviation, which, based upon historical data, should of created some negative movement in the USD,

Actually this release is historically unreliable even with large deviations. Look what happened on the past few Advance releases (which are more important than Preliminary), and you'll see what I mean. This report is virtually worthless for news trading right now. It might come back, but I'd suggest staying away for awhile until there are 2-3 good releases with reliable price action first, then go back in...