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Forex Signal (Wed October 27 2010, 10:00am NY Time EDT) - US New Home Sales

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Oct 26, 2010.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

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    U.S. New Home Sales usually follows the trend of Existing Home Sales, therefore we are likely to see a slightly better than expected figure. Here is the forecast:

    10:00am NY Time New Home Sales Forecast 300K Previous 288K
    ACTION: SELL 370K EURUSD BUY 230K GBPUSD


    The Trade Plan
    We’ll trade this release using a deviation of 70K; if the release is lower, it would strengthened risk aversion sentiment and we should look to BUY EURUSD or GBPUSD; if the number is higher, it could provide a temporary support for the pair and we may see a slight rally in USD/JPY.

    We'll be looking for a possible after-news retracement trade. As I have explained in previous analysis, we need to wait for the release, wait for the market to spike, and wait for decent retracement. This is the 3 "W"s of Retracement Trading system. It is especially important to make sure there is a momentum during the spike before jumping in. For more information, read:
    Henry's News Trading Method.

    The Market
    We may see some speculative orders if the US Durable Goods (scheduled at 8:30am) comes out much better (or worse) than expected. Since the Existing Home Sales on Monday already painted a better than expected housing market, traders may just "buy on rumor..." ahead of the release.

    However, the long-term view on the U.S. Housing sector should still remain under pressure because of high unemployment rate, low consumer consumption, tight credit conditions, and supply outpacing demands, not mentioning the end of New Home Buyer's Credit...

    Additional Thoughts
    Taking the context of the week which we saw some consolidation over recent weakness in the USD, market may continue with that sentiment through the day, possibly until Friday's Adv. GDP release.

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

    Definition:
    “Measures the annualized number of new residential buildings that were sold during the previous month. A rising trend has a positive effect on the nation’s currency because the housing market is a leading gauge for the overall economy. A high level of housing activity signals that the construction industry is healthy and that consumers have the capital to make large investments. More importantly, new housing activity creates an economic ripple effect as home owners buy goods such as appliances and furniture for their homes, and builders buy raw materials and hire more workers to meet demand.”

    Historical Chart & Data For US New Home Sales


    Thanks,


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    #1 Henry Liu, Oct 26, 2010
    Lasted edited by : Sep 8, 2016

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