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Sir Pipsalot's Forex News Trading Preview for 11-23 to 11-26

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, Nov 23, 2010.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    General forex news trading advice for this week:

    Right now we're seeing EUR/USD dominated by European headlines right now, so I'd prefer to play it safe and put initial focus on USD/JPY this week for the more complicated US trades, and perhaps look to EUR/USD for afterspike opportunities if that pair does end up dominating the initial action.

    Tuesday 11-23

    0700 CAD Core CPI m/m (0.1% expected) - I don't really trust this news right now. It's possible a 0.3+ devaition could manage a 30-40 pip move, but I don't have a lot of faith in the odds or in any follow through, so I'd skip this one.

    0830 US Annualized GDP (Prelim) and CAD Retail Sales headline (2.4%-USGDP and 0.7%-CADRS expected) - We should be getting both of these figures at about the same time which may make trading either one a bit difficult.

    Spike Strategy: I'd focus on USD/JPY for the spike with a 0.5 trigger for USGDP. If you want to get in on CAD RS, you can also set up triggers for a wide 0.8%+ deviation and choose USD/CAD, EUR/CAD or hedge yourself against the US GDP situation by trading both.

    Afterspike Strategy: For an afterspike, use some common sense... trade EUR/CAD if both US and CAD numbers are strong or both are weak, and trade USD/CAD if both US and CAD numbers come out as one strong, and the other weak. Also look to EUR/USD if there is a decent surprise on US GDP. If there's a lot more action there than USD/JPY, try the afterspike there instead.

    If USGDP comes out at 2.9% or higher, USD/JPY should rally 40 pips.
    If USGDP comes out at 1.9% or lower, USD/JPY should drop 40 pips.
    If CADRS comes out at 1.5% or higher, USD/CAD and EUR/CAD should drop 40 pips.
    If CADRS comes out at -0.1% or lower, USD/CAD and EUR/CAD should rally 40 pips.

    1000 US Exisiting Home Sales (4.48M expected) - This news has been much better for S&P 500 futures than for currency trading for the past year.

    Spike Strategy: I would not spike trade this on currencies. Only S&P 500 futures (ESZ0). I'd expect a 5 point whippy spike with a strong chance for a continuation for a 10 point total move within 10 minutes. With that in mind, try to get in within 2-3 points of prerelease and consider taking partial profits quickly, and letting part of the spike trade ride for 5-10 minutes to milk the potential follow through.

    Afterspike Strategy: For forex, look for the USD/JPY to make a sneaky 25-35 pip move that takes a few minutes to complete. In anticipation of that, try to get in within 10-15 pips of prerelease in the first 1-2 minutes and set modest 10-20 pips TP targets. For ESZ0, again, try to get within 2-3 points of prerelease and look to hold the trade anywhere from 5-15 minutes.

    If it comes out at 4.88M or higher, ESZ0 should rally 5-10 points and USD/JPY should rally 25-35 pips.
    If it comes out at 4.08M or lower, ESZ0 should drop 5-10 points and USD/JPY should fall 25-35 pips.
    ***If it comes out at 3.82M or lower, this would be the lowest level in over a decade and is below the most pessimistic estimates, so this could cause an exaggerrated move where ESZ0 sees 10-15 points down and USD/JPY could lose 50 pips over 30-60 minutes.


    Wednesday 11-24

    0400 German IFO Business Climate (107.5 expected) - This news usually spikes 30-40 pips in the first 2 minutes, but then commentary from the IFO can drive the trade in either direction from that point for 40-70 pips.

    Spike Strategy: Trade the trigger straight up and take profit around the 1-2 minute mark.

    Afterspike Strategy: Try not to get suckered into an afterspike trade until you consider commentary from the IFO (usually from Nerb). Commentary that is very optimistic should turn a down spike upwards or cause an up spike to perhaps double its move. Any somewhat negative insight into the European peripheral debt situation would be the most likely scenario for pessimistic commentary and would lead to a reveral lower for an up spike or a continuation lower for a down spike.

    If it comes out at 108.5 or higher, EUR/USD should rally 30-40 pips.
    If it comes out at 106.5 or lower, EUR/USD should drop 30-40 pips.
    ***Note - Last month's 107.6 reading was the highest reading in 3 1/2 years

    0430 UK GDP 2nd release (0.8% expected) - Last month's 0.4% surprise on the first release of GDP sparked a 40 pip spike up and another 40 pips over 30 minutes. For the last 3 years though, the 2nd revision sees no more than a 0.1% deviation and unreliable price action due to the small trigger. Because of this, I'd recommend only trading a bigger 0.2% deviation.

    Spike Strategy: Look for 40 pips quickly on the spike if trigger is hit.

    Afterspike Strategy: Try to get in within 25 pips of prerelease on any initial volatility or retracement in the first minute or two, otherwise you may need to chase the price a bit to capture some of the very likely extention.

    If it comes out at 1.0% or higher, GBP/USD should rally 40 pips
    If it comes out at 0.8% or lower, GBP/USD should sell off 40 pips

    0830 Various US Reports including Core Durable Goods, Personal Spending, Personal Income, Core PCE - Of all these reports, Core Durable Goods (0.6% expected) probably the most potent, but with so much potential for conflict and confusion, I would avoid the spike trade here and just look for an afterspike if most of the numbers come out in the same direction.

    Afterspike Strategy - I'd use any version the SNW or some other news software tool to help see how all of these numbers are coming out. I'd give the most weighting to Core Durable Goods (+/- 1.0 to 1.5% deviation), followed by Personal Spending (0.5% expected and +/- 0.3 deviation), then the rest (just look for + or -). Because of the multitude of numbers, there's a good chance we'll see initial hesitation that will allow manual entry fairly close to prerelease within the first minute.

    --If it's a generally positive picture with either spending or Core DG high, I'd buy USD/JPY within 10-15 pips of prerelease and expect a 30-40 pip rally over 3-10 minutes.
    --If it's a generally negative picture with either spending or core DG low, I'd sell USD/JPY within 10-15 pips of prerelease and expect a 30-40 pip selloff over 3-10 minutes.


    Thursday 11-25

    0830 US Weekly Initial Jobless Claims (435K expected but could shift by Thursday) - So far in November, we've seen US IJC performing quite well for some easy afterspike action on USD/JPY with about 15K triggers. Remember though to reverse your triggers (high IJC is bad, low IJC is good).

    Afterspike Strategy: If trigger is hit, look to get in on USD/JPY within 8-10 pips of prerelease (there's usually not much of an initial spike). Then, expect the move to continue for a 25-35 pip move over 5-10 minutes. Most recently, about the 8 minute point has been the best time to exit.

    If it comes out at 450K or higher, USD/JPY should sell off 25-35 pips over 5-10 minutes.
    If it comes out at 420K or lower, USD/JPY should rally 25-35 pips over 5-10 minutes.


    I hope this new format will be a little more useful for you guys moving forward, while also being a little easier for me to keep up with since I won't have to put out a signal every night. If there are any key changes to the forex news landscape, or new insights into trends I'm following, I'll try to post additional signals during the week. Feel free to give me some feedback here with what you think.

    To Our Success!
    Sir Pipsalot
     

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