Forex Signal (Thu September 16 2010, 4:30am NY Time EDT) - UK Retail Sales m/m

[Henry Liu]

Today’s Retail Sales number from UK will be widely watched as this is a high impact yet tradable report. Here is the forecast for this release:

4:30am (NY Time) Forecast 0.3% Previous 1.1%
ACTION: GBP/USD BUY 0.8% SELL -0.3%

The Trade Plan
Retail Sales by definition is a direct measurement of consumer activities at the retail levels. A higher release is generally good for the economy, and better for it’s currency; a lower release is considered as negative for the economy and not good for it’s currency.

Our tradable deviation or surprise factor for UK Retail Sales is 0.5% to BUY and 0.6% to SELL. If our deviation is hit, we can expect the market to move at least 50 pips within the hour, with a historical accuracy of 78%. We’ll be looking to BUY GBP/USD if we get a 0.8% or better release, and SELL GBP/USD if we get a -0.3% or worse.

We'll be looking for an after-news retracement trade for this release. For more information on my trading methods:
Henry's News Trading Methods.

The Market
GBP has gained on the back of a weaker EUR, better CPI, and hawkish statement from BOE Miles yesterday. It seems that inflationary pressure is still uncomfortably high in UK, therefore further quantitative easing to stimulate the economy may be delayed.

Traders are now looking for direction from this release to push GBP, as a negative release will help to consolidate recent gains; a better than expected release might push beyond recent highs and break above 1.5700 psychological resistance.

Additional Thoughts
GBPUSD has broken above the 1.5600 level and out of the range started since early August... if we get a positive number, we could see further strength in the currency and retesting the 1.6000 is not out of the realm of possibilities in the next few weeks.

Pre-news Consideration
No pre-news consideration for this trade... Although we did get a bit of worse Claimant Count, I don't think it is wise to go against general market trend.

For historical chart & data for UK Retail Sales


Thanks,

 

[BayoBest]

Thanks for the detail.

Sam

 

[Roger Goh]

Thank you

Thanks for the tip Henry......cheers

 

[gunner12]

Is it Sell at -0.6%?

Hi Henry

Thanks for trade info. Question:

Is it "tradable deviation or surprise factor for UK Retail Sales is 0.5% to BUY and - 0.6% to SELL?"

 

[BayoBest]

Hi Henry

Thanks for trade info. Question:

Is it "tradable deviation or surprise factor for UK Retail Sales is 0.5% to BUY and - 0.6% to SELL?"

Friend,

Trade Action is BUY if Actual Release is 0.8% and SELL if -0.3%
Compare this with the 0.3% Forecast,
BUY deviation is 0.5% and SELL deviation is 0.6%.
Deviation is different between Actual Released Figure and Forecast Figure

I hope this help.

Sam

 

[gunner12]

Thanks Sam

 

[kkunlexx]

thanks Henry yesterday was great for those who joined NZD. i hope today too will make us glad. thanks for your assistance

 

[digital_soul]

historical accuracy at 78%? well this one failed big time, at the point of writing this the GBP has almost retraced the whole 50-80 pips that it dropped even when the trade was triggered. talk about volitility!

 

[Mandrake]

historical accuracy at 78%? well this one failed big time, at the point of writing this the GBP has almost retraced the whole 50-80 pips that it dropped even when the trade was triggered. talk about volitility!

Yup this one is total scrap alright.

 

[Boko Maru]

historical accuracy at 78%? well this one failed big time, at the point of writing this the GBP has almost retraced the whole 50-80 pips that it dropped even when the trade was triggered. talk about volitility!

Actually it did drop 67 pips from pre-release, so technically it did fulfill the "50 pips in an hour" criteria Henry uses (me defending Henry-who would have believed that! hehe...)

I know a number of people probably got hosed on this report, but there was ample opportunity to make money. I entered short at about 1.5570, and best exit was around 1.5543 (I scaled out).

I used Forex Charts | Economic Indicators | Economic News | SMS Mobile News and Price Alerts to look at historical price action within the 1st minute (they show tick charts). I noticed that more than once GU retraced about 38% in the first 45 seconds, so I was looking for that as an opportunity today.

I actually entered about 25 seconds after the release (that's when a good enough retrace occurred) , and closed most of the position about 30 seconds later, so all of this within the first minute. A need to be nimble for sure, but that's often the case with news. Reason I'm sharing this is to point out that I wouldn't have known any of this unless I had previously researched the tick data on historical charts.

So as a general comment (not really to you digital soul, but more to the Henry worshipers), I'll just repeat what I've said many times before: it's essential that everyone does their OWN research. Henry can't and won't cover every scenario that might occur.

Anyway, hope some of that is helpful, but if not my apologies...



P.S. edit: the website link I posted got converted into that thing up there, but the site is spikecharts.com. Cost is $20 a month for the charts, and well worth it in my opinion...(and no, I'm not an affiliate! hehe....)