Forex Signal (Mon October 25 2010, 10:00am NY Time EDT) - US Existing Home Sales

Henry Liu

Former FPA Special Consultant
US Existing Home Sales is expected to increase from previous month as current market situation is showing signs of bottoming out on the housing sector. Here's forecast:

Existing Home Sales Forecast 4.29M Previous 4.13M

The Trade Plan

Because the Housing sector is one of the most focused news events out of the US, this release will certainly cause some volatility in the market, especially if our tradable figures (+/- 400K) were hit. With the focus of the nation, and of the world, on the status of U.S. housing sector, this release may bring about a strong sentiment of risk appetite/aversion if our BUY/SELL trigger is hit…

If our buy tradable deviation is hit, or 4.70M figure is released, we should look to SELL EURUSD after the release. If our buy tradable deviation is hit, or 3.90M figure is release, we should look to BUY EURUSD as USD should be sold off again.

We'll be looking to trade this release using the after-news retracement trading method. We'll wait for the release, wait for market reaction, and wait for retracement before jumping in. For more information:
Henry's News Trading Method.

The Market
With the current market once again selling off USD and USDJPY making new 15 year lows, it is very likely that this release may be the catalyst for some much needed consolidation of USD, if we get a strong release.

Additional Thoughts
This release is scheduled at 10:00am US Time, it is the last high impact news for the NY session, we could see some exaggerated market movements as traders may just wait for this release to be out of the way before committing to a position.

Pre-news Considerations
There is no pre-news opportunity for this release.

“Measures the annualized number of existing residential buildings that were sold during the previous month. A rising trend has a positive effect on the nation’s currency because large purchases tend to be made by consumers that are optimistic and confident in their financial position. The sale of a home also triggers commissions for real estate agents, and often home owners will purchase goods such as appliances and furniture shortly after purchasing a home. Traders watch this report closely as it’s the month’s first demand-side housing indicator to be released.”

Historical Data & Chart For US Existing Home Sales


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