U.S. New Home Sales usually follows the trend of Existing Home Sales, therefore we are likely to see a worse than expected figure. Here is the forecast:
10:00am NY Time New Home Sales Forecast 333K Previous 330K
ACTION: USD/JPY BUY 400K SELL 260K
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 SELL USD/JPY; 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.
The Market
With the general market in risk aversion sentiment, we’ll probably see continous demand for USD and JPY. 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 expiration of New Home Buyer’s Credit…
Additional Thoughts
Taking the context of both Asian and European sessions, we may not get much movement from this release if we see excessive reaction coming into NY Session. Therefore use caution even when we get our tradable release.
Pre-news Consideration
There is no pre-news for this release. But the general theme is for risk aversion, therefore I’d expect to see stronger JPY and stronger USD throughout the day.
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.”
Related posts:
- Forex News Trading Plan For US New Home Sales 11/24/10
- US New Home Sales Forex Trading Plan 10/27/10
- Forex Trading Plan for US New Home Sales 04/23/10
- US New Home Sales 01/27/10
- Forex News Trading US New Home Sales 02/24/11
- Forex News Trading US New Home Sales m/m 03/23/11
- Forex News Trading US New Home Sales m/m 04/25/11
- Forex News Trading US New Home Sales 01/26/11
- Forex News Trading US New Home Sales m/m 05/24/11
- Forex Analysis For US New Home Sales 07/26/11
{ 7 comments… read them below or add one }
Hi Henry,
Figures came out in the red for the report, but the USD/JPY rallied up… What is your take on this market
reaction? Thanks
Harry
JPY is at support and it is limited downside. I would always recommend to look at the context of the market and the 3 “W”s of retracement trade means to always
1. Wait for the deviation to be hit = it didn’t
2. Wait for market to spike = it didn’t
3. Wait for decent retracement = it did.
So this is a no trade.
I don\’t uderstand. The news was less than expected but the USD went up still?
I don’t uderstand. The news was less than expected but the USD went up still?
Understand that we didn’t hit our trigger, so it should have been a no trade. However, USD is a safe haven currency and on a worse release, which sends out a message that world economy could slip into recession, or at least recovery is stalling, traders are going to want buy USD for the safety.
Trading the news is new to me. I have a bad internet connection and after seeing your videos I see that I should just stay calm. After this and the latest NFP trade I start to understand how the market reacts. Although, we didn’t hit the trigger here and in the latest NFP, I noted that fading the news spike may be viable. This has been discussed in a lot of forums but most would discourage against it. I noted that if we don’t hit the trigger the levels go back to pre-spike levels. What’s your take on this?
Yes that is usually the case, and the reason why we have triggers in order to trade.