Hi there my friend 
Let's first review what happened on Monday.
Quite honestly, we did not have any trading opportunity.
U.S. Empire State Business Conditions Index came out worse than expected. It came out -8.7 versus -1.5 expected. It did not hit my triggers, and that was good because we did not see much price action happening.
Then we had U.S. TIC Net Long-Term Transactions which came out 115.1 B versus 63B expected. I decided not to trade this report, and I did not give triggers for it. As I said in my previous email, this may deviate a lot but still the price action might be questionable whereas sometimes with a small deviation it may move pretty well. Well, we did get a quite big deviation but neither USD/JPY nor EUR/USD was moving enough to even cover higher spreads. I prefer to skip some reports to reduce overall risk on my live accounts than gamble on reports like this. This time it was good to stay away.
Then we had Bernanke speaking but I don't trade speeches myself as I like to trade "numbers" only. When I see a "good" number, I can place a trade with a confidence; when I hear someone speaking, I never know what else can be said and how the market will really react. I know there are people who successfully trade speeches, even Sir Pips is quite good in it, and that's fine with me. I have made enough money on the other reports anyway. Besides, speeches are not for beginners either so I will not even comment it here.
Let's talk about Tuesday.
Well, I am very excited about Tuesday because we might have two very good trading opportunities. I hope we will get enough deviation at least on one of them.
1. Tuesday, June 17th, 2008 (4:30 a.m. New York Time) UK
At 4:30 a.m. we will have UK CPI y/y headline. It is expected to come out at 3.2% versus 3.0% last moth. 0.2 deviation either way should move GBP/USD by 40 pips. Therefore, if it comes out at 3.4% or higher, I would buy GBP/USD. If it comes out at 3.0% or lower, I would sell GBP/USD. If you are a SNW subscriber, have a broker with a reasonable spread and you like to be more aggresive, you may try to enter with a SMALL position on +0.1 deviation only. If it deviates by +0.1, then we would get 3.3% versus 3.0% last month and GBP/USD may spike up a little for a *quick* profit (keep in mind that a conflict with the other numbers can be deadly). I would not trade it with -0.1 deviation, however, because although the CPI would be lower than expected, it would still be higher than last month. We will also need some agreement from the core and headline numbers, both m/m and y/y. If there are any conflicts, I would stay away from trading it or at least be extremely careful and go for a quick profit taking. As always, use your best judge when trading the news.
2. Tuesday, June 17th, 2008 (5:00 a.m. New York Time) EURO ZONE, GERMANY
At 5:00 a.m. we will have German ZEW Economic Sentiment which is expected to come out at -42.5. In general, a deviation of 8 should be good enough to move EUR/USD by 40+ pips. Therefore, if it comes out at -50.5 or lower (more negative), I would sell EUR/USD. If it comes out at -34.5 or less negative, I would buy EUR/USD. Again, if you are able to get in on the spike, and have a broker with a small spread, you may try to use 5 trigger on this report. However, this is only for brave people with the access to a good technology such as Secret News Weapon. Right before the news I would analyze the trend and the price action on EUR/USD, and if I feel like it is safe enough to trade on 5 deviation, I will go for it for a quick profit of 15 to 20 pips. If you want to do that, remember to pay close attention to the spread and enter only if it is not too high. EUR/USD has high liquidity so chances are good you may have a low spread.
3a. Tuesday, June 17th, 2008 (8:30 a.m. New York Time) USA
At 8:30 a.m. we will have US Core PPI m/m and Housing Starts. Sir Pips says that 0.3% deviation on Core PPI m/m with no conflicts should cause EUR/USD to move 30 pips, while a Housing Starts with 75k deviation should move USD/JPY by 30-40 pips. Quite honestly, I am not a big fan of PPI. If I feel like I want to get up for this morning report, maybe I will go for it with lower position size but most likely I will try to oversleep this report which would be a good excuse not to trade it. I don't have any confidence in PPI numbers, and I think we have so many other reports that I can afford not to trade it even if it would move a market by a few pips. So, if you want to trade it, go for it but trade it with at least 0.3 deviation and even with such deviation do not expect too much. Actually, in March 2008 we had +0.3 deviation and EUR/USD did not even move 10 pips... so judge yourself if it is worthy to take a risk.
3b. Tuesday, June 17th, 2008 (8:30 a.m. New York Time) USA
Regarding the Housing Starts, this actually may move the market quite a bit. I would go with 75 K deviation. It is expected to come out at 980K. If it comes out at 1055, this would be higher than even last month, and USD/JPY may go up by 40 pips. If you like to be more aggressive, you can set up a buy trigger on 1033 K number (+53 K deviation) for a quick profit of 20 pips or so because this would be a slightly better number than last month as well, and I think the market would appreciate any good sign in the house market. On the other hand, if it comes out at 905K or less, that would be a very bad number and USD/JPY should go down by 40 pips as well. You may try to tighten the trigger as well if the trend, price action and a spread in your broker permits but don't get overaggressive as everyone knows that the market is not doing well so another bad number would not be a big surprise.
UPDATE: I see Forex Factory has higher consensus now for the Housing Starts. I decided to definitely skip both the Housing indicator and the PPI. There are too many indicators coming out at the same time: you will also have Building Permits and Current Account; although they are not that much important, if they all deviate greatly the price may move significantly. The question is which report will be released first: in the spike trading split of second delay may let you enter at much worse price so if the small reports are released first, the price might be already moving before you get what you want to trade. Or, you can enter a trade with "your" indicator, and then all the other will came out conflicting, screwing you up totally. I am happy with today's profits and if I am going to miss a few pips spike, let it be. We have more nice reports coming out this week, and the truth to be said, none of the reports at 8:30 a.m. is really moving the market. Officially it is a no trade. As far as the afterspike is concerned, when all the numbers deviate in one direction, you might consider entering a small position within a few pips of the prerelease price and try to scalp a few pips, especially if the numbers agree with the trend.
Well, that would be all for Tuesday. Quite a long email but I hope you will find my research useful. Keep in mind that I will be trading what I wrote on my own LIVE account so I try my best to make a good judgement. If I don't, then I will pay the price on my own live account instantly. So far, most of the time I have gains on all of my accounts...
If you need a software for spike trading, give a try at The Secret News Weapon - they don't pay me any commission on mentioning it, and I administer the Diamonds room rather than the SNW service. But I make a very good money on the spikes so you may give a try too. They offer 25 days money back policy so there is nothing what you can lose.
If you have any feedback regarding this signal, please do not hesitate to leave a comment.
Sir Pips is on the vacation right now so Magister Pips is substituting him on the Diamonds room. If you need some real time guidance on trading the news, give a try at Forex Diamonds - News Trading Education - this comes with 21 days money back policy. Worst case scenario you will learn something and get your money back when you request it.
Thank you very much and happy trading!
To our success!
--Crazy Cat
Let's first review what happened on Monday.
Quite honestly, we did not have any trading opportunity.
U.S. Empire State Business Conditions Index came out worse than expected. It came out -8.7 versus -1.5 expected. It did not hit my triggers, and that was good because we did not see much price action happening.
Then we had U.S. TIC Net Long-Term Transactions which came out 115.1 B versus 63B expected. I decided not to trade this report, and I did not give triggers for it. As I said in my previous email, this may deviate a lot but still the price action might be questionable whereas sometimes with a small deviation it may move pretty well. Well, we did get a quite big deviation but neither USD/JPY nor EUR/USD was moving enough to even cover higher spreads. I prefer to skip some reports to reduce overall risk on my live accounts than gamble on reports like this. This time it was good to stay away.
Then we had Bernanke speaking but I don't trade speeches myself as I like to trade "numbers" only. When I see a "good" number, I can place a trade with a confidence; when I hear someone speaking, I never know what else can be said and how the market will really react. I know there are people who successfully trade speeches, even Sir Pips is quite good in it, and that's fine with me. I have made enough money on the other reports anyway. Besides, speeches are not for beginners either so I will not even comment it here.
Let's talk about Tuesday.
Well, I am very excited about Tuesday because we might have two very good trading opportunities. I hope we will get enough deviation at least on one of them.
1. Tuesday, June 17th, 2008 (4:30 a.m. New York Time) UK
At 4:30 a.m. we will have UK CPI y/y headline. It is expected to come out at 3.2% versus 3.0% last moth. 0.2 deviation either way should move GBP/USD by 40 pips. Therefore, if it comes out at 3.4% or higher, I would buy GBP/USD. If it comes out at 3.0% or lower, I would sell GBP/USD. If you are a SNW subscriber, have a broker with a reasonable spread and you like to be more aggresive, you may try to enter with a SMALL position on +0.1 deviation only. If it deviates by +0.1, then we would get 3.3% versus 3.0% last month and GBP/USD may spike up a little for a *quick* profit (keep in mind that a conflict with the other numbers can be deadly). I would not trade it with -0.1 deviation, however, because although the CPI would be lower than expected, it would still be higher than last month. We will also need some agreement from the core and headline numbers, both m/m and y/y. If there are any conflicts, I would stay away from trading it or at least be extremely careful and go for a quick profit taking. As always, use your best judge when trading the news.
2. Tuesday, June 17th, 2008 (5:00 a.m. New York Time) EURO ZONE, GERMANY
At 5:00 a.m. we will have German ZEW Economic Sentiment which is expected to come out at -42.5. In general, a deviation of 8 should be good enough to move EUR/USD by 40+ pips. Therefore, if it comes out at -50.5 or lower (more negative), I would sell EUR/USD. If it comes out at -34.5 or less negative, I would buy EUR/USD. Again, if you are able to get in on the spike, and have a broker with a small spread, you may try to use 5 trigger on this report. However, this is only for brave people with the access to a good technology such as Secret News Weapon. Right before the news I would analyze the trend and the price action on EUR/USD, and if I feel like it is safe enough to trade on 5 deviation, I will go for it for a quick profit of 15 to 20 pips. If you want to do that, remember to pay close attention to the spread and enter only if it is not too high. EUR/USD has high liquidity so chances are good you may have a low spread.
3a. Tuesday, June 17th, 2008 (8:30 a.m. New York Time) USA
At 8:30 a.m. we will have US Core PPI m/m and Housing Starts. Sir Pips says that 0.3% deviation on Core PPI m/m with no conflicts should cause EUR/USD to move 30 pips, while a Housing Starts with 75k deviation should move USD/JPY by 30-40 pips. Quite honestly, I am not a big fan of PPI. If I feel like I want to get up for this morning report, maybe I will go for it with lower position size but most likely I will try to oversleep this report which would be a good excuse not to trade it. I don't have any confidence in PPI numbers, and I think we have so many other reports that I can afford not to trade it even if it would move a market by a few pips. So, if you want to trade it, go for it but trade it with at least 0.3 deviation and even with such deviation do not expect too much. Actually, in March 2008 we had +0.3 deviation and EUR/USD did not even move 10 pips... so judge yourself if it is worthy to take a risk.
3b. Tuesday, June 17th, 2008 (8:30 a.m. New York Time) USA
Regarding the Housing Starts, this actually may move the market quite a bit. I would go with 75 K deviation. It is expected to come out at 980K. If it comes out at 1055, this would be higher than even last month, and USD/JPY may go up by 40 pips. If you like to be more aggressive, you can set up a buy trigger on 1033 K number (+53 K deviation) for a quick profit of 20 pips or so because this would be a slightly better number than last month as well, and I think the market would appreciate any good sign in the house market. On the other hand, if it comes out at 905K or less, that would be a very bad number and USD/JPY should go down by 40 pips as well. You may try to tighten the trigger as well if the trend, price action and a spread in your broker permits but don't get overaggressive as everyone knows that the market is not doing well so another bad number would not be a big surprise.
UPDATE: I see Forex Factory has higher consensus now for the Housing Starts. I decided to definitely skip both the Housing indicator and the PPI. There are too many indicators coming out at the same time: you will also have Building Permits and Current Account; although they are not that much important, if they all deviate greatly the price may move significantly. The question is which report will be released first: in the spike trading split of second delay may let you enter at much worse price so if the small reports are released first, the price might be already moving before you get what you want to trade. Or, you can enter a trade with "your" indicator, and then all the other will came out conflicting, screwing you up totally. I am happy with today's profits and if I am going to miss a few pips spike, let it be. We have more nice reports coming out this week, and the truth to be said, none of the reports at 8:30 a.m. is really moving the market. Officially it is a no trade. As far as the afterspike is concerned, when all the numbers deviate in one direction, you might consider entering a small position within a few pips of the prerelease price and try to scalp a few pips, especially if the numbers agree with the trend.
Well, that would be all for Tuesday. Quite a long email but I hope you will find my research useful. Keep in mind that I will be trading what I wrote on my own LIVE account so I try my best to make a good judgement. If I don't, then I will pay the price on my own live account instantly. So far, most of the time I have gains on all of my accounts...
If you need a software for spike trading, give a try at The Secret News Weapon - they don't pay me any commission on mentioning it, and I administer the Diamonds room rather than the SNW service. But I make a very good money on the spikes so you may give a try too. They offer 25 days money back policy so there is nothing what you can lose.
If you have any feedback regarding this signal, please do not hesitate to leave a comment.
Sir Pips is on the vacation right now so Magister Pips is substituting him on the Diamonds room. If you need some real time guidance on trading the news, give a try at Forex Diamonds - News Trading Education - this comes with 21 days money back policy. Worst case scenario you will learn something and get your money back when you request it.
Thank you very much and happy trading!
To our success!
--Crazy Cat
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