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Forex Signal (Tuesday April 3, 2012 - 12:30am EDT) - AU RBA Interest Rate

Discussion in 'Current Forex Trading Signals' started by Stavro D'Amore, Apr 2, 2012.

  1. Stavro D'Amore

    Stavro D'Amore Former FPA Special Consultant

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    Hello members,

    Today we have AU RBA Interest Rate due to come, this will be an interesting release due to the current circumstances, Please find my trade plan bellow.

    AU RBA Interest Rate
    Forecast 4.25%
    Previous 4.25%
    Pair to trade: AUD/USD

    Numbers we need:
    BUY AUD/USD 4.50% or greater
    SELL AUD/USD 4.00% or lower

    Economical Impact: Critical
    Typical Result: Hawkish, Good for Currency
    Occurrence: First Tuesday of the month,
    Spike Probability: Very Good, we can see 50 pips on initial spike

    About our Triggers:
    If RBA increases interest rates, we should see a SPIKE in AUD of 50 pips and I will buy AUDUSD or other AUD crosses. (this is highly unlikely)
    At the present moment, the expectation for a rate hike is one of this year's greatest guessing games, with a decrease on rates is on the cards too, we could see some AUD sell off prior to the news.

    If RBA decrease the rate we could see a 50 pip spike to the down side with AUD getting pulled back by 200pips by weeks end.

    Current pressure from the government’s new carbon tax, poor performing markets and pull back in the housing market. We could also see rates decrease.
    RBA will make further statements after the release in the condition of the economy and there forecast this will make the AUD very volatile.

    If the RBA decides to keep rates unchanged, we may see a sell-off, as the accompanied RBA statement may be dovish in light of recent news events.

    What is it? And why does the market care?
    The Reserve Bank of Australia's monthly interest rate statement describes its latest decision regarding changes to the country's short term interest rates, monetary policy, and the direction of the economy.
    Short term interest rates are the key factor in currency valuation. A dovish statement could push AUD down against its rivals, while hawkish statement could boost the currency.

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

    Euro Zone Crisis
    See my Euro crisis views and how this will cause a ripple on the EUR/USD

    I will not trade SPIKE on this release as there is great chance of slippage and latency.

    I will look for a 30% retracement in the original spike if our triggers are hit before entering. I will be looking at a 5 minute chart. 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 the original spike 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 to analyze this.

    Historical Chart and AU RBA Interest Rate

    All the best

    Stavro D’Amore
     

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