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Forex Signal (Tuesday November 15, 2011 NY TIME 4:30am EDT) – UK CPI y/y

Discussion in 'Current Forex Trading Signals' started by Stavro D'Amore, Nov 14, 2011.

  1. Stavro D'Amore

    Stavro D'Amore Former FPA Special Consultant

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    Hello All,

    Please see my in-depth analysis for UK CPI y/y

    UK CPI y/y
    Forecast 5.1
    Previous 5.2%
    Pair to trade: GBP/USD
    Estimated Pips: 40 pips on initial spike

    The numbers we will look for:
    BUY GBP/USD at 5.3% SELL GBP/USD at 4.8%

    Economical Impact: High (will bring strong volatility)
    Typical Result: Good for currency
    Occurrence: Released monthly, about 15 days after the month ends

    About our Triggers:
    We will be looking for a deviation of 0.2 % to BUY GBP/USD and -0.2 to SELL GBP/USD.
    If our deviation is hit, there is a strong possibility that the market will move 40 pips on spike immediately; there is a good chance that we will get a 30% retracement before entering if we miss the spike.

    What is it? Why does the market care?
    The Consumer Price Index (CPI) measures the changes in the price of goods and services.
    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 UK. A higher than expected reading should be taken as positive/bullish for the GBP, (as the common way to fight inflation is raising rates, which may attract foreign investment) ,while 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

    See Felix Descriptions
    Indicator Descriptions

    Pre News
    Approximately within the 30 minutes and up to 5 min prior to the news release I will be looking for a short term SHORT position using GBP/USD pair.
    I would be out of this trade 2 minute before the actual release, or to avoid any spreads that should widen to protect myself.

    How to determine my Pre news trade
    Please only follow this if you have basic knowledge of technical’s, if not please practice and use various demo accounts prior to using any professional strategy I suggest. To determine my short position on an MT4 chart, I will pull up a 1mintime frame GBP/USD chart. I will then load two MA (moving average) indicators to my chart, the first MA I will load will be on set to period 9 whilst the other I will set to a period of 20. I would also recommend you change the colour of both I usually use green and red.

    When I see the down trend occur and my MA crosses over I will enter short, I want to be out of this trade in profit at least 2 min before the release. I will have a Stop loss of 15 pips and a TP either when I see the trade looking flat (looking at Volume Bars that is) or when an initial reversal comes to play.

    Your MA should look like the chart below, red and green I would have entered short on this trade during the cross over.

    [​IMG]

    Spike Trading
    I do recommend spike trading as an option if you have an Auto clicker.
    Please use limit orders or bounds set to 15 pip entry

    After Spike
    I will look for a 30% retracement in the original spike before entering a trade; 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 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 expect to be in this trade for a total of 30 mins.

    Historical Chart and Data UK CPI y/y

    All the best

    Stavro D’Amore
     
    #1 Stavro D'Amore, Nov 14, 2011
    Lasted edited by : Sep 8, 2016
  2. Amon Mitch

    Amon Mitch Recruit

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    Dear Stavro,

    What do you suggest as a way of detecting the deviation? Would a Bollinger Band with MA of 20 and Deviation of 2 be good for this (MT4 Bollinger Defaut).

    If so, on what timeframe should this be used?
     
  3. matiplo

    matiplo Private

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    Can somebody explain me what happened with CPI price action here?

    At the time of news FTSE, CAC were strongly down.
    Asian markets closed down very much and also US markets were down yesterday.
    So it is perfect risk aversion scenario.
    I play gbpusd
    I took aggressive triggers from previous month +/-0.2 suggested by Profit Mongers and Crazy Cat. Due to very strong risk aversion, I decided to even narrow lower trigger, so I set -0.1 / +0.2 for both m/m and y/y CPI. And when both was released with -0.1 deviation, I was triggered sell, but GU went up... why??? I think in so pesimistic market, if both y/y and m/m deviate in minus, it should go down even more!! Please explain me if I;m wrong...
     
  4. matiplo

    matiplo Private

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    and one question to PipDog: you were to check how SNW Elite performs for a month.. Is it really much faster than Pro? Is it worth its price?
     
  5. PipDog

    PipDog Corporal

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    2 Things


    No I have not tried the SNW Elite...yet.

    The perfect risk aversion scenario is, in my opinion, to have the stock markets down big, and, get a better than expected CPI. This would drive the GBPUSD up for a bit, then it'd go back down. Make a sell after the news.

    What happened in this case was it looked as if the market had predicted a bad CPI as the GU fell about 40 pips about 10 minutes before news...leak? Then, the news came out not so bad. Negative slack was already taken up. If you're still in the trade...it may still work out, but stocks need to take a dive.

    Good luck!
     
  6. matiplo

    matiplo Private

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    Would you take advantage of this situation or is it too risky? I mean: when you see that price dives 40 pips around 10 mins before release, you know that it is a leak. So market expects data to be low, very low, so you may change triggers from -0.3/+0.3 to -0.6/0.0 or even -0.7/-0.1 and then... your buy trigger is hit and you earn on upward move, what would happen in this case if I set triggers -0.7/-0.1.
    Since you are far more experienced: if you see price dive like this, announcing very bad number, and then the number is only -0.1, so much better than market expects, would you get in and go long?
     
  7. Stavro D'Amore

    Stavro D'Amore Former FPA Special Consultant

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    That is why you should have taken advantage of my pre news :)
     
  8. PipDog

    PipDog Corporal

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    Go long? No reason to do that...the numbers were not good. Not every news release results in a trade. I did not take a trade on this one. If the CPI had come out like +.1 or +.2 deviation, then I'd of went short after the spike up. With stocks down and risk aversion on, I find it hard to go long.

    Stavro's idea to go short pre-news was a crystal ball event. ;)
     
  9. Stavro D'Amore

    Stavro D'Amore Former FPA Special Consultant

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    I hold the magic crystal ball i can sell it! :p
     

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