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The release of the monthly employment report seemingly rivals the post-FOMC meeting press release as the single most anticipated economic event in the financial markets. Given its significance, therefore, it is probably not too surprising that economists and market participants try to anticipate changes in this and other labor market indicators. The report measures the total number of people currently unemployed who are eligible to receive unemployment insurance benefits.

In relation to financial markets and particularly Forex market, we have seen that after Unemployment Claims’ announcement, the currency pair EUR/USD is affected in a particular pattern. A historical analysis during 3 months shows us that the influence of the Unemployment Claims moved the EUR/USD in an average of 400 pips each time.

The effect of the announcement would influence the market in two ways:
•When the announcement is higher than expected, the currency pair might react with an uptrend.
•When the announcement is lower than expected, it would create a downtrend.

Looking at 5 minutes timeframe, we set a 5 periods RSI at close with 30, 50, and 70 levels, which can give us a confirmation of the signal when the trend changes its direction. However, as most trend indicators this can only show us when the trend cross a level which not always takes place. We must wait for a few minutes, maybe a couple of candles, before taking a position. That way the target must be around an average of 200.

In conclusion, we fix our entry point depending of the candles formation. We will enter when there are two candles formation in the same direction with a RSI or MACD cross confirmation. We then set a target depending on the amount of pips left to trade out of the 400 average. We can also use the Traling Stop algorithm in Metatrader 4 settings if we see a longer influence of the fundamental.

We present a brief review of the Unemployment Claims weekly labor market data and its effect over EUR/USD currency pair. We then examine whether our strategy is useful for predicting the behavior of the market in this particular scenario.

Check the whole strategy here:
[url=http://expertsmt4.wordpress.com/2008/11/21/unemployment-claims-strategy/]Unemployment Claims Strategy « MT4 Experts Advisor’s Blog[/url]