Forex Signal (Monday April 2, 2012 - 10:00am EDT - US ISM - Manufacturing PMI

Stavro D'Amore

Former FPA Special Consultant
Hello all,

Today we have US ISM manufacturing due for its release; I have provided my strategy and some information in my trade plan below so we can earn some pips.

US ISM Manufacturing PMI
Forecast 53.3
Previous 52.4
Pair to trade: EUR/USD & USD/JPY
Triggers we need: 55.8 SELL EUR/USD 50.8 SELL USD/JPY

Economical Impact: High
Typical Result: Actual forecast is good for the currency
Occurrence: Released monthly
Spike Probability: Good, we can see 30 pip spike

About our Triggers:
Current forecast is 53.3 We'll be using deviation of 2.5 points in order to BUY or SELL USD.
In the event that 55.8 is reached, we could see some USD strength and EURO weakness. Therefore you could SHORT SELL EUR/USD; however, if the opposite is true and a figure of 50.8 or lower is released, expect to see I will be Shorting USD/JPY pair

Euro Crisis
What is it all about click here for more explanation

What is it? And why does the market care?
It's a leading indicator of economic health and businesses both global and local businesses will react quickly to market conditions. A Higher deviation means industry expansion, lower deviations indicates a significant contraction in the economy. It is derived by a survey of about 400 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries and inventories

A higher than expected reading should be taken as positive/bullish for the USD
A lower than expected reading should be taken as negative/bearish for the USD.

Method I use to trade this:
Stavro D’Amore Trading Method

Pre News
Prior to the release (20-15 mins) I will be looking for a short term long position in EUR/USD and I will get out of this trade 5 minutes before the actual release or any spreads that should widen.

I'd recommend spike trading as an option when if you’re using an ECN broker with controlled fills or a broker that you can get filled with.

After Release
I will look for a 35% retracement in the original spike before entering a trade; I will close half my position as soon as I hit the original high point of the first initial spike, and place a SL at entry price. My TP level would be Just before a resistance level or if the chart decides to form a level looking at a 15 min time frame. If my triggers are hit I will defiantly try to run this for over 120 minutes depending on current market volume, to do this I will look for a choppy volume (if you’re using MT4 you would look for the volume bar tab).

Historical Chart and Data for US ISM Manufacturing PMI

All the best

Stavro D’Amore