Forex Signal (Thu January 20 2011, 10:00am NY Time EST) - US Existing Home Sales

Henry Liu

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

Existing Home Sales Forecast 4.88M Previous 4.68M

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 5.30M figure is released, we should look to SELL EURUSD after the release. If our buy tradable deviation is hit, or 4.40M 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 U.S. housing market hitting bottom and showing signs of improvement, market is expecting a slight improvement in today's housing number by 4% compared to last month's release.

However, as always, seasonal factor is always important to consider, with consumer confidence still suffering, this release could come out just in-line or slightly worse... At any rate, unless we get a surprise release, we should not jump into the market.

Additional Thoughts
This release is scheduled at 10:00am US Time, usually it is the last high impact news for the NY session, but with today's FOMC Minutes scheduled at 2:00pm, we may not get much market reaction.

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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5.28...very close to the trigger retracement done i suppose. can we still sell it now?