Forex Signal (Thursday August 18, 2011 NY TIME 8:30am EDT – US Core CPI m/m)

Stavro D'Amore

Former FPA Special Consultant
US Core CPI m/m
Forecast 0.2%
Previous 0.3%
Pair to trade: USD/JPY

Numbers we need: BUY USD/JPY 0.4% and SELL USD/JPY -0.0%

Economical Impact: Critical
Typical Result: Good for currency
Occurrence: Released monthly, about 15 days after the month ends

About our Triggers:
US Core CPI is forecasted to arrive at 0.2%. We are looking for a deviation on this trade of 0.2% to enter a LONG position on USD/JPY and -0.3% to go SHORT. Should this report be triggered, we can expect to see about 45pips on the initial spike, if there is no conflict.

What is it?
The Core Consumer Price Index (CPI) measures the changes in the price of goods and services excluding food and energy. The CPI measures price change from the perspective of the consumer.
It is a key way to measure changes in purchasing trends and inflation in the US

Why does the market care?
Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.

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
Please be diligent trading this report as we have CPI m/m and Unemployment claims figures due out at the same time; there is a good chance of news conflict so I will only trade retracement with this sentiment and avoid using initial spike trading.

I will look for a 30-50% retracement in the original spike before entering a trade; I will sell 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 support level, looking at a 15 minute chart time frame.
Historical Chart and Data for US Core CPI

All the best

Stavro D’Amore
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