UK Retails Sales Trade

This morning we had a very interesting time with the UK Retail Sales release. Approximately 10 minutes prior to the release some other information came out that caused the GBPUSD to drop over 100 pips in a very short period of time. As a result, I recommended raising the safe trigger to 0.8% and to focus more on a sell than on a buy. The data came out 0.4% better than expected, so it missed our raised trigger. After a few moments, the GBPUSD did go up approximately 20 pips, but then it started to continue its push to the down side. After the news, I suggested a small sell trade on the GBPUSD, and I entered at approximately 1.5620. As I was wrapping up the trade room we were seeing approximately 40-50 pips of profit on that trade. In the next hour after the trade, the GBPUSD dropped another 50-60 pips so there was an opportunity to take over 100 pips on that trade before the GBPUSD finally started heading back up.

Tomorrow we will have two opportunities for trades at two different times. The first opportunity will be the UK GDP report that will come out at 4:30 am EDT. For the UK GDP, the expected number is -1.9%, and we will be looking for a deviation of at least 0.1% to trigger a safe trade. A higher than expected number (less negative) will be good for the GBP and signal a long the GBPUSD, and a lower than expected number (more negative) will be bad for the GBP and signal a short on the GBPUSD.

I would prefer to see a buy trigger on this particular release as the GBPUSD is still making a strong move to the upside. However, we could still see a 20-40 pip move if the safe sell trigger is met. I will most likely close the entire trade with 20-40 pips if we get a sell trigger. If we get a buy trigger and get a move of 30-40 pips, I will most likely close a portion of the trade and then lock in and hold the other portion of the trade for an even larger potential move.

The UK GDP report has met our safe trigger the last five months and the GBPUSD has moved between 25 and 40 pips each time. Last month it came out with a strong -0.4% deviation and the GBPUSD dropped approximately 50 pips. It came out at the same time as the UK Retail Sales last month, so we were focused more on the Retail Sales number. The last time this report came out on its own and met our safe trigger was in March, and it provided traders who traded the 0.1% trigger with up to 40 pips of profit. The chart below shows the movement of the GBPUSD at the time of March’s release:

Here’s the video of March’s trade:

The second opportunity to trade comes when the Canadian Retail Sales Report is released at 8:30 am EDT. Our main focus will be on the Canadian Retail Sales Less Autos report, and the expected number for this report is -0.2%. A higher than expected number will be good for the CAD and signal a short on the USD/CAD and EUR/CAD, and a lower than expected number will be bad for the CAD and signal a long on the USD/CAD and EUR/CAD. We will be looking for a deviation of 0.4% on this report to trigger a safe trade.

For this trade, we will probably prefer to see a sell signal on this as the EURCAD and USDCAD are in a down trend, but it should still be tradable either way. We will use caution on this particular release as we have had some quick spikes then reversals lately on this particular release.

This report has met our safe trigger in seven out of the last twelve months and has provided moves of 15 to 90 pips each time. It last met our safe trigger last month and provided traders with up to 15 pips of profit on the USDCAD and EURCAD, depending on their entries. The chart below shows the movement of the EURCAD at the time of last month’s release.

To see the video of last month’s trade, click on the following link:

This is our current outlook for these trades; however, it is subject to change as market conditions may change by tomorrow. Be sure to log in to the Live Trade Room 15 minutes prior to the releases to get my commentary on these potential trades.

Good Luck!!!!

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