Forex Signal (Tuesday November 1, 2011 – 10:00am EDT) – US ISM Manufacturing PMI

Stavro D'Amore

Former FPA Special Consultant
Messages
547
Hello

Please see my trade plan for US ISM Manufacturing PMI

US ISM Manufacturing PMI
Forecast 52
Previous 51
Pair to trade: USD/JPY and EUR/USD

Numbers we need:
BUY USD/JPY 54.5 or higher
BUY EUR/USD 49.5 or lower

Economical Impact: High
Typical Result: Good for Currency
Occurrence: monthly, on the first business day after the month ends
Spike Probability: Good, we can see 45 pips on initial spike

About our Triggers:
US ISM Manufacturing Index forecasted to arrive at 52
we are looking for a deviation of 2.5K either way on this trade.
If we get 54.5 or better I will look to enter a LONG position on USD/JPY and if we get
49.5 or lower deviation I will go LONG on EUR/USD.
Should this report be triggered, we can expect to see about 45 pips on the initial spike on both pairs USD/JPY and EUR/USD. We have no known conflict for this release. This trade will have a good chance of a 30% retrace on the initial spike.

What is it? And why does the market care?
This data is considered a very important and trusted economic measure. If the index has a value below 50, due to a decrease in activity, it tends to indicate an economic recession, especially if the trend continues over several months. A value substantially above 50 likely indicates a time of economic growth. The [/b][/b]ISM index is the result of a monthly survey of over 400 companies in 20 industries throughout the 50 states.
The ISM's leading quality has been proven over time. During a recession, the ISM's bottom may precede the turning point for the economic cycle by some months.

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

I do recommend spike trading as an option. Liquidity is very good at the moment if you are using an ECN broker. Please use no more than a 15 pip limit order to control slippage.

I will look for a 30% retracement in the original spike 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 analyze this.

Historical Chart and Data for US ISM Manufacturing PMI

All the best

Stavro D’Amore
 
Last edited by a moderator:
Top