Forex News Analysis For US New Home Sales 03/23/12

US New Home Sales usually follows the trend of Existing Home Sales, therefore we´re likely to see an inline release today.

Here is the forecast:
10:00am NY Time New Home Sales Forecast 325 Previous 321K
ACTION: 400 BUY USDJPY/ 250 SELL USDJPY

The Trade Plan
We´ll trade this release using a deviation of 70K; if the release is lower, it would strengthen USD aversion sentiment and we should look to SELL USDJPY. A stronger number could provide temporary support for the pair and we may see a slight rally in USD therefore we should look to BUY USDJPY.

3rd Party Advertisement

We´ll be looking for a possible after-news retracement trade. We need to wait for the release, then wait for the market to spike, and wait for decent retracement. This is the 3 “W”s of the Retracement Trading system. It´s especially important to make sure there is momentum during the spike before jumping in. For more information, read:
http://www.currencynewstrading.com/how-to-get-started-with-news-trading/

The Market
Today´s release of US New Home Sales is likely to fall inline with analysts’ expectation of around 325K as recent data in the housing market is showing signs of bottoming… with Home Prices remaining relatively unchanged but considering the improvements in the jobs market, I believe it is just a matter of time for the housing market to improve.

Additional Information
Housing market is extremely important for the economy… therefore, if we start to see a trend in the housing figures, it would be confirmation for economic recovery.

Pre-news Consideration
There is no pre-news for this release.

Definition of New Home Sales
“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.”

Thanks,