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Forex Signal (Wed, September 1 2010, 10:00am NY Time EST) - US ISM Manufacturing PMI

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Sep 1, 2010.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

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    ISM or Institute for Supply Management is releasing its PMI (Purchasing Manager Index) and it is similar to the UK Manufacturing PMI as this release is targeting the Manufacturing sector. As a leading indicator, traders generally pay attention to this report for hints of economic trend. Here’s the forecast:

    10:00am NY Time US ISM Manufacturing PMI Forecast 53.2 Previous 55.5
    ACTION: USD/JPY BUY 56.0 SELL 50.5 USDJPY

    The Trade Plan

    We’ll be looking for 2.5 points of deviation for this trade. If a 56.0 or better number is released, we could see some USD strength and JPY weakness, thererefore a BUY on the USD/JPY. If the opposite is true, or 50.5 figure is released, expect to see stronger JPY in the short term.

    If our tradable releases are reached, there is a good expectation of 50 pips of market movement within the next 60 minutes on USD/JPY. I’ll be looking to trade USD/JPY or other JPY crosses as they may all exhibit similar movements using my Retracement Trading Method.
    Henry's News Trading Method

    The Market
    U.S. ISM Manufacturing PMI current expectation is above the 50 level at 53.2, as 50 is considered the medium point for the PMI’s, this release is considered as expansion in the manufacturing sector. ISM PMI’s are leading indicator as stated before, and usually they do not affect the long-term trend of the market, unless we get a huge surprise.

    If the release is below 50, it would be considered a huge surprise, and we should expect some heavy selling in the USD as the US economic outlook disappoints the market once again. We could take LONG trades EUR/USD or GBP/USD instead of SHORT USDJPY as we approach the 84.00 support.

    Additional Thought
    As stated before, the 50 level is crucial for this release and anything above the 50 could still be considered as positive, especially taking the context of the market for the week... therefore, I'd be very careful when taking a SELL trade on USDJPY as the overall market has pushed this pair to the strong support level.

    Since NY traders will be waiting for this release to be out of the way before committing to a position, volatility may be high but there is no way to predict the direction… Therefore unless we get our tradable release, we should stay out…

    Pre-news Consideration
    Since PMI's are not trend changing releases, there should be no overwhelming sentiment prior to the release.

    DEFINITION
    “The Institute of Supply Management (ISM) Manufacturing Index 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 Chart & Data US ISM Manufacturing PMI

    Thanks,


    [​IMG]
     
    #1 Henry Liu, Sep 1, 2010
    Lasted edited by : Sep 8, 2016
  2. 15IHc

    15IHc Recruit

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    Henry,

    Thank you for your commentary. As with your other ones, it is clear, to the point, and helpful.
     
  3. pdxdonsmith

    pdxdonsmith Recruit

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    RIsk-off = $ up?

    Henry,

    Is it possible that with a big downside surprise, we could actually see the dollar strengthen because of the "risk-off" trade? Just curious. I would expect the US stock market to react negatively, but that's usually negatively correlated with the dollar.

    Your thoughts?

    Don
     
  4. kkunlexx

    kkunlexx Private

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    Henry,
    I' glad i made something great from the AUD signal. It went just as your predicted. you ae great. keep it up. cheers
     
  5. Muhammad_ali0027

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    very nice stratgey

    Man you are geniuos every time we got lot of pips from your forecast.thanks again you are brawoo.:mad:
     
  6. Huwee

    Huwee Corporal

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    Deviation hit - not a lot of retracement... got in long USD/JPY at 84.51, trade didn't seem to be going well, so got out at 84.48. -3 pips!

    But I just thought better to get out early with a small loss than stay in for a potentially bigger loss... :- )

    Huwee.
     
    #6 Huwee, Sep 1, 2010
    Last edited: Sep 1, 2010
  7. DumbAsArock

    DumbAsArock Private, 1st Class

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    Hello Henry,

    Thank you for your excellent and clear analysis.

    Two questions, if I may:

    1) For today's US ISM Manufacturing PMI at which point did you enter the market? Time? Price? This seems like a gut feel or "Art of Trading" situation. Personally, I couldn't figure it out, but then again look at my screen name.

    2) Which time frame graph(s) are you looking at when you're doing this?

    Thank you.
     
  8. mohabed

    mohabed Recruit

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    mohbed _amir@yahoo.com

    :nerd:hello mr henry tanks lf you can send anales wit chart
     

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