Before I continue with my signal for the first trading day of the year, let me talk about how we ended the month of December. The month of December for news trades was excellend in the first two weeks, but in the third and fourth week was horrible. Due to Christmas, the 4th week was pretty much gone, because most of 4th week's reports were stuffed into the 3rd week of December, so we had a lot of big conflicting reports released together, and couldn't really have any clean trades. This week is very light on the economic reports for Monday and Tuesday, but very heavy on the news on Wednesday, Thursday, and Friday. Monday of course is the first of January holiday, and Tuesday is a memorial/funeral for Gerald Ford, the U.S. president who replaced Nixon during the WaterGate scandal. So the stock market in the U.S. is closed both days, so the forex volume will still be thinner than normal on Tuesday, January 2nd.
I personally want to stay out of the markets on January 2nd. First of all, because it's the first trading day of the year, second of all, the U.S. volume is going to be thinner than normal, and third of all, because we only have one report, which is definitely important, but I can't say that it has flawless trading history, and I'd rather observe everything on January 2nd, and plunge into the markets on January 3rd, when everything settles down and things return to normal. That report that I am talking about is UK Manufacturing PMI, and in case you want to trade it, here is what you can do...
1. Tuesday, January 2nd, 2007 (4:30 am New York Time) UK
We have UK Manufacturing PMI coming out. This is a private report that measures manufacturing activity in the UK for the month of December. This report has been on a steady decline since September of this year. In September the reading peaked out at 54.4, which was the second highest reading this year, then it was on a steady decline coming out at 53.7 in October, and 52.6 in November. This month, most economists are expecting the reading to be somewhere between 52.5 and 53.0. If this number comes out at 53.8 or higher, that would be a surprising break of the steady decline, and it would mean that the number is reading higher than in September, so I may possibly go long on GBP/USD. If the number comes out at 51.9 or lower, it would be the second lowest reading this year, it would be below the psychologially important 52.0 level, and only about 2 out of 30 economists think that the number will come out below 52, so in that case, I may possibly go short on GBP/USD. If my triggers are hit, I would expect a move between 30 to 50 pips, but of course important price levels before the release of this important will play an important role as always.
Again, I am not planning to trade this report, but rather just watch and see what happens. See how the spreads are reacting on various brokers, see what the price does, and all that. This is the first report of the year, on thinner volume than normal. If I were you, I would do the same.
I personally want to stay out of the markets on January 2nd. First of all, because it's the first trading day of the year, second of all, the U.S. volume is going to be thinner than normal, and third of all, because we only have one report, which is definitely important, but I can't say that it has flawless trading history, and I'd rather observe everything on January 2nd, and plunge into the markets on January 3rd, when everything settles down and things return to normal. That report that I am talking about is UK Manufacturing PMI, and in case you want to trade it, here is what you can do...
1. Tuesday, January 2nd, 2007 (4:30 am New York Time) UK
We have UK Manufacturing PMI coming out. This is a private report that measures manufacturing activity in the UK for the month of December. This report has been on a steady decline since September of this year. In September the reading peaked out at 54.4, which was the second highest reading this year, then it was on a steady decline coming out at 53.7 in October, and 52.6 in November. This month, most economists are expecting the reading to be somewhere between 52.5 and 53.0. If this number comes out at 53.8 or higher, that would be a surprising break of the steady decline, and it would mean that the number is reading higher than in September, so I may possibly go long on GBP/USD. If the number comes out at 51.9 or lower, it would be the second lowest reading this year, it would be below the psychologially important 52.0 level, and only about 2 out of 30 economists think that the number will come out below 52, so in that case, I may possibly go short on GBP/USD. If my triggers are hit, I would expect a move between 30 to 50 pips, but of course important price levels before the release of this important will play an important role as always.
Again, I am not planning to trade this report, but rather just watch and see what happens. See how the spreads are reacting on various brokers, see what the price does, and all that. This is the first report of the year, on thinner volume than normal. If I were you, I would do the same.
posted by Naveen Pantera at 8:14 PM
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