UK Prelim GDP q/q 07/24/09

4:30am (NY Time) UK GDP q/q       Forecast -0.3%    Previous -2.4%
ACTION: (GBP/USD)                               BUY 0.1%                 SELL -0.5%

Our focus will be on the GDP, is defined as the market value of all final goods and services produced within a country in a given period of time. It is also considered the sum of value added at every stage of production of all final goods and services produced within a country in a given period of time.  GDP is the primary measure for the economy’s health, and a stronger GDP means that the central bank will more likely to raise interest rate.

Our surprise factor is 0.4% for LONG and 0.2% for SHORT, we’ll look to SELL GBP/USD at -0.5% or worse and BUY GBP/USD at 0.1% or better.  Historically, there is a 80% of chance if our S. Factor is hit, the market will move up to 50~70 pips within the hour.

Since the Prelim GDP is the first release of the quarterly GDP, it is usually the one with most potential for surprise.  This is probably the most important news event for UK in this quarter.

UPDATE 1: In response to the requests that I am getting from these posts, I am going to make a special video on Sentiment Trading, which is one of my signature Forex systems.  Should have this video completed in the next 24 ~ 48 hours. 

UPDATE2: GDP came out much worse than expected at -0.8% with no prior revision.  This brings yearly GDP to -5.6%, the largest decline since record begin in 1955.  GBP/USD dropped immediately about 40 pips, then I waited for a retracement and SOLD GBP/USD for about 30 pips of profit.  Not a bad trade for 1 hour of work.

Click here to watch the video