Forex Signal (Tuesday May 2, 2012 – 4:30am EDT) – UK Manufacturing PMI m/m

Stavro D'Amore

Former FPA Special Consultant
Messages
547
Hello All,

Please find below my trade plan.

UK Manufacturing PMI
Forecast 52.1
Previous 51.4
Pair to trade: GBP/USD

Numbers we need:
BUY GBP/USD if we get 54.1 or higher
SELL GBP/USD if we 50.1 or lower

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Economic Impact: High
Typical Result: Good for Currency
Occurrence: on the first business day after the month ends
Spike Probability: Good, we can see 30 pips on initial spike

About our Triggers:
UK Manufacturing PMI is forecasted to arrive at 52.1
We are looking for a deviation of 2 either way on this trade.
If we get 54.1 or better I will look to enter a LONG position on GBP/USD and if we get
50.1 or lower I will go SHORT on GBP/USD.
Should this report be triggered, we can expect to see about 30 pips on the initial spike. We have no known conflict for this release. This trade will have a good chance of a 30% retrace on the initial spike, Please use 10 pip slippage control or limit order

What is it? And why does the market care?
It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy. Traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

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

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

I will look for a 30% 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.

I do recommend spike trading as an option when there is great uncertainty in the markets; also the liquidity is very good at the moment if you are using an ECN broker.

All the best

Stavro D’Amore
 
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