Forex Signal (Tue October 26 2010, 4:30am NY Time EDT) - UK Prelim GDP q/q

Henry Liu

Former FPA Special Consultant
Messages
473
UK quarterly GDP release is always a high impact report. With this being the Prelim release, or the first release of three, we are likely to see more market participation. Here is the forecast number:

UK Prelim GDP q/q Forecast 0.4% Previous 1.2%
ACTION: (GBP/USD) BUY 0.6% SELL 0.2%


The Trade Plan
Our deviation for today's trade is 0.2% to SELL and 0.2% to BUY. We’ll look to possibly SELL GBP/USD at 0.2% of release figure or worse; BUY GBP/USD at 0.6% of release figure or better. This will be the 4th consecutive quarter of positive GDP release from UK.

Depending on the surprise of this release, we could go from after news retracement trade to spike trading. I believe if we get a 0.8% or better release, it justifies spiking trading to buy GBPUSD immediately. If we get 0.0%or worse, then it is also justified to SELL GBPUSD on a spike trade. Here's the link that explains my trading methods:
Henry's Retracement Trading Method

The Market
Medium Forecast sits at 0.4% out of 35 analysts surveyed by Bloomberg. Market is expecting this release to be significantly lower than previous quarter, but nevertheless a minimum of 0.4% of growth is expected.

With BOE Posen openly calling for adding stimulus, this GDP release is going to carry a lot of weight as traders speculate BOE's next move. With recent Manufacturing PMI showing moderation and Services PMI showing expansion, there is a possibility for a surprise, which should make this event very tradable.

Additional Thoughts
Since the Prelim GDP is the first release of the quarterly GDP, it’s usually the one with most potential for surprises. This is the most important news event for UK in this week, and a highly anticipated one.

Pre-news Consideration
Due to recent market condition (driven by risk sentiments), I'd stay out of pre-news trading until market returns to normal.

Definition
UK Prelim GDP q/q for Q2 2010 is expected to be a positive release of 0.6% surveyed by Bloomberg. GDP is defined 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 is the basically direct measure of the economy’s health, and a stronger GDP means that the central bank will more likely to raise interest to curb inflation.

For historical data and charts on UK Prelim GDP q/q:
Historical Data & Charts UK GDP q/q


Thanks,


 
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Punle

Recruit
Messages
4
Wow, at last one great deviation, and I can't get in in time because we had to trade the spike, almost no retracement. Anybody has a free news feed good enough for spike trading? Again, thanks Henry!
 
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amar_butt

Recruit
Messages
11
thanks sir,
I made few pips, but i would suggest if you also mention a long term impect of a news so that we can hold a position for long to gain extra pips. hope you will consider this matter.
Thanks again for good work.
God bless you.
 

swingfiddle

Private
Messages
42
i missed that also

i saw the spike but had moved already 50-60 pips until i see the actual on forexfactory...missed that...
i see a strong resistance on 1.5878 but i dont know if this helps the price to retrace...still waiting
 

italiafirenze

Recruit
Messages
1
I struggled to find the news in time for the spike. It seemed like the market knew what the news was before I did. Shame, because the spike was good for 40-50 pips.

I waited for the retracement but it never happened.

In future on such a big spike, is it okay to look for a retracement from the top of the spike rather than the original price?

Overall I think I felt like I'd missed the boat a bit with that one. It was a few minutes after 9.30 before I found the 0.8% figure and by that time I was a little cautious about getting in, so just waited and waited for the retrace.

Thanks for the signals, learning a lot, takes some practice though!
 

ecafyelims

Corporal
Messages
59
Thanks Henry, I opened two positions at different times. 40 pips from both!
There wasn't a 15 point retrace, but when the price hovered for a while, I got in, and it worked beautifully.

Any implications on long term?
 
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