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Forex Signal (Thu January 6 2011, 4:30am NY Time EST) - UK Services PMI

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Jan 5, 2011.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

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    We’ll be trading the UK Services Purchasing Manager Index today at 4:30am (NY Time). This is a leading indicator similar to the Manufacturing PMI that was released early this week, here’s the forecast:

    4:30am (NY Time) UK Services PMI Forecast 53.0 Previous 53.0
    ACTION: GBP/USD BUY 55.5 SELL 49.9


    The Services PMI is tradable with a minimum deviation of 2.5 between the forecast and the actual release. If we get at least 55.5 or better, we could see some demand in the GBP and we will consider BUYING GBP/USD or GBP/JPY pairs. If we get a 49.9 (anything below the medium 50 level), GBP could weaken and we should look to SELL GBP/USD or GBP/JPY pairs.

    I'll be trading this release using after news retracement trading method. For more information on my methods:
    Henry's news trading methods.

    The Market
    With recent UK data showing strong fundamental outlook and inflation, general market sentiment has been somewhat neutral towards Sterling... However, most European currencies are under strong correctional pressure from last two weeks of gains, thus making GBP trading weak against USD for the better part of t his week.

    If we do get a strong release, market demand for GBP will surely rise; if we do get a weak release, we could see sell-off continuing as current market is definitely leaning towards USD strength.

    Additional Thoughts
    UK’s economy is 73% Services related, if we get a strong release on this PMI, we could see GBP sentiment turn bullish. Even though this PMI release does not change the long-term trend, but as leading indicator and being released during the early part of the month usually helps to define the trend for the rest of the month.

    Pre-News Consideration
    There is no pre-news consideration for this release...

    DEFINITION:
    “The Chartered Institute of Purchasing and Supply (CIPS) Services Purchasing Manager’s Index (PMI) measures the activity level of purchasing managers in the services sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation’s currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.”

    Historical data and charts for UK Services PMI


    Thanks,


    [​IMG]
     
    #1 Henry Liu, Jan 5, 2011
    Lasted edited by : Sep 8, 2016
  2. PipDog

    PipDog Corporal

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    Nice Deviation...Nice Spike

    Nice spike, but no decent retrace...again. I tried to get in the spike short at 1.5552...on 2 accounts...and was denied trade on both. That would of been sweet...

    Did anyone try to sell on the pause (around 1.5505) or the retrace (what there was) at around 1.5515? Both would of turned out good...but would of taken guts.
     

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