Forex Signal (Wednesday October 26, 2011 NY TIME 10:00am EDT) – US New Home Sales

Stavro D'Amore

Former FPA Special Consultant

Please see my trade plan for US New Home Sales due today.

US New Home Sales
Forecast 300k
Previous 295K
Pair to trade: EUR/USD & USD/JPY

Triggers we need: BUY EUR/USD 370k

Economical Impact: Extremely Critical
Typical Result: Good for currency
Occurrence: Released monthly, about 23 days after the month ends
Pip Rang: 45

About our Triggers:
US New home sales forecasted to arrive at 300k. We are looking for a deviation on this trade of 70K to BUY EUR/USD and a deviation of -70K to BUY USD/JPY. This is a very critical news release as many traders and economists will be focusing on this news release. Should this trade deviate, we will see major volatility in all US pairs. We can expect to see about 45pips on the initial spike.

What is it? Why does the market care?
See Felix Descriptions!
The New Home Sales measures the annualized number of new residential buildings that were sold during the previous month.
This report helps to analyze the strength of the US housing market, which helps to analysis the economy as a whole.
The new home sales report is quite volatile and subject to huge revisions.

A higher than expected reading should be taken as positive/bullish for the USD
A lower than expected reading should be taken as negative/bearish for the USD.

Method I use to trade this:
Stavro D’Amore Trading Method

Pre- News
Please only follow this if you have basic knowledge of technicals, if not please practice and use demo accounts prior to using any professional strategy I suggest.

Approximately within the 15 minutes and up to 2min prior to the news release I will be looking for a short term Short position using EUR/USD pair.
I would be out of this trade 2 minute before the actual release, or to avoid any spreads that should widen to protect myself.

To determine my SHORT position on an MT4 chart, I will pull up a 1mintime frame EUR/USD chart. I will then load two MA (moving average) indicators to my chart, the first MA I will load will be on set to period 9 whilst the other I will set to a period of 20. I would also recommend you change the colour of both I usually use green and red.

When I see the downtrend occur and my MA crosses over I will enter SHORT, I want to be out of this trade in profit at least 2 min before the release. I will have a Stop loss of 15 pips and a TP either when I see the trade looking flat (looking at Volume Bars that is) or when an initial reversal comes to play.

Spike Trading
I do recommend spike trading as an option if you are using auto click software and the golden goose broker that fills you in.

After News
I will look for a 30-50% retracement in the original spike before entering a trade; I will close half my position as soon as I hit the original high point of the first initial spike and place a SL at entry price. My TP level would be just before a resistance level or if the chart decides to form a support level, looking at a 15 minute chart time frame.

Historical Chart and Data for US New Home Sales

All the best

Stavro D’Amore
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