Forex Signal (Tuesday May 2, 2012 – 12:30am EDT) – AU Interest Rate

Stavro D'Amore

Former FPA Special Consultant
Messages
547
Hello members,

Today we have AU Interest rate due to come, this will be an interesting release due to the current circumstances, looks like an interest rate drop is on the cards. Please find my trade plan bellow.

AU Interest rate
Forecast 4.00%
Previous 4.25%
Pair to trade: AUD/USD

Numbers we need:
SELL AUD/USD 4.00% or lower -0.25

If RBA do not decrease the rate and we stay on Hold look for a short time frame of buying Opportunity.

Economic Impact: Critical
Typical Result: Hawkish, Good for Currency
Occurrence: First Tuesday of the month in Australia.
Spike Probability: Good, we can see 50 pips or more on initial spike

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About our Triggers:
If RBA increases interest rates, we should SPIKE in AUD of 50 pips and I will buy AUDUSD or other AUD crosses.
At the present moment, the expectation for a rate drop is on the cards with a decrease 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 loosing over 150 pips in 3 days.

There is still a pull back in the housing market over Australia. RBA will make further statements after the release in the condition of the economy and there forecast this will make the AUD very volatile.

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

Pre News Trade
I will Look to sell AUD/USD around 30 mins prior to news and be closed out of this trade 5 miniutes before its release.

Spike
I will trade SPIKE on this release.

After News
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 close 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 analyse this.


All the best

Stavro D’Amore
 
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