Thursday, October 11, 2007

Trading Signals and News Update For Thursday

Yesterday we had only one report coming out that we were watching and possibly trading, and that was the Australian employment change. As you could see, it did not hit my trigger as it came out 13,000, and my trigger was 5,000 or below. There was also a conflicting number on the unemployment rate. The AUD/USD did not do much either. That was definitely a no trade.

Let's now talk about Today.

1. Thursday, October 11th, 2007 (8:30 a.m. New York Time) USA & CANADA
Tomorrow we will have a trade balance coming out of the USA and Canada, both at 8:30 a.m. Normally I trade them, but this time I am skipping them. Most of people don't care about U.S. trade balance. Canadian trade balance, however, used to be a good indicator but last month we saw a huge drop by 1.3 B as it was expected to come out at 5 B, and it came out at 3.7 B. We saw no price action at all. You can go to our calendar on ForexBastards website, and if you click on the file, you can see history charts for this indicator. As you can see there, although last month the deviation was 1.3 B, and U.S. trade balance came out as expected, USD/CAD went up 15 pips, and then it dropped by a lot more. It seems that the trade balance is not in focus right now so I don't want to take any unnecessary risk, and trade something that is not hot. I suggest you to skip this one.

2. Thursday, October 11th, 2007 (5:45 p.m. New York Time) NEW ZEALAND
Then we will have retail sales coming out of New Zealand. The number to focus on will be retail sales headline number as the core number has very little importance here. It is expected it will come out at 0.4%. If it comes out at 0.1% or below, that would be a second month in a row with a very low reading, and I think we may see NZD/USD going down by 30 pips or more in the first hour of the report. On the other hand, if the retail sales comes out at 0.7% or higher, we may see NZD/USD gaining 30 pips or more in the first hour of the report. Support and resistance levels as well as the amount of deviation will be important for this indicator, especially a support level on the downside. What is more, we may even see a 50 pips move if the deviation is bigger than 0.3% either direction but I think 30 pips is a very safe target here. Skip the spike, wait when the price retraces, and I would try to get in within 10 to 15 pips of the pre-release price, or maybe even as much as 20 pips if the deviation is huge like 1.00 or higher.

* Report: New Zealand Trade Balance
* Sell on NZD/USD if the number will be 0.1% or lower
* Buy on NZD/USD if the number will be 0.7 or higher
* If the trigger is hit, expect 30 pips or more in the first hour of the report.

That would be all for today.

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