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Forex Signal (Tuesday October 18, 2011 NY TIME 4:30am EDT) – UK CPI

Discussion in 'Current Forex Trading Signals' started by Stavro D'Amore, Oct 17, 2011.

  1. Stavro D'Amore

    Stavro D'Amore Former FPA Special Consultant

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    Hello all,

    The first trade of the week has arrived, Lets see how it goes.

    UK CPI
    Forecast 4.9%
    Previous 4.5%
    Pair to trade: GBP/USD


    The numbers we will look for:
    BUY GBP/USD if we get 5.1%
    SELL GBP/USD if we get 4.4%


    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 and a negative -0.5 to SELL. If our deviation is hit, there is a strong and concussive possibility that the market will move 50 pips immediately either way with a double spike before an initial retracement of 30%.

    What is it?
    The Consumer Price Index (CPI) measures the changes in the price of goods and services. This is one of the UK leading indicators, it will bring strong volatility in the markets should we get our deviations.

    Why does the market care?
    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. This is considered the UK's most important inflation data because it's used as the central bank's inflation target. A lower than expected reading should be taken as negative/bearish for the GBP. One of the most common ways to fight inflation is raising the cash rates, which may attract foreign investment.

    Method I use to trade this:
    Stavro D’Amore Trading Method
    Please be diligent trading this report as the UK RPI figures are also out; however I do not expect the numbers to conflict.

    Pre News
    Approximately 15 minutes prior to the news release I will be looking for a short term short position using GBP/USD pair.
    I would be out of the trade 1 minute before the actual release, or to avoid any spreads that should widen.

    After News
    I will look for a 30-50% 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 expect to be in this trade running for over just over 40 mins in total.

    Spike
    I do recommend spike trading as an option if you have an Auto clicker. Spike trading is great when there is great uncertainty in the markets.

    Historical Chart and Data UK CPI

    All the best

    Stavro D’Amore
     
    #1 Stavro D'Amore, Oct 17, 2011
    Lasted edited by : Sep 8, 2016
  2. strangelove

    strangelove Recruit

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    So it is the y/y that is the driver and not the m/m?
     
  3. tangmase

    tangmase Corporal

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    good signal

    sive, you had a great idea. thanks for the signal. :)
     
  4. 1RomanAnin

    1RomanAnin Recruit

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    Uk Cpi 2010/10/18 Gmt 08:30

    Stavros,

    Info was "dead nuts" on target.

    GBP/USD, 20 mins before announcement hi was 1.5780, lo 1.5766
    01 mins before announcement hi was 1.5766, lo 1.5760
    possible pickup of +0 to +20 pips (I did NOT take an entry on this segment)

    at 08:17 after announcemnet lo was 1.5710
    delta from hi to lo 80 minus 10 = 70 pips (Stavros you predicted a minimum variance of 50 pips; actual was 70 pips - GREAT)

    based on your forecast of a 30% retracement, that is .30 * 70 pips = 21 pips worth of potential retracement - actual immediate retracement was 23 pips - Stavros, AGAIN, GREAT - "dead nuts" on the money

    at 15:05 after announcement retrace was to 1.5733 a retrace of 23 pips

    Great forecast, and I made money. THANK YOU.

    BTW, for the readers, I trade using a range bar charting system, and a Currenex low spread TES (trade execution system) - that is why/how I am able to tell the actual times things occur. :)
     
  5. shinodaz

    shinodaz Recruit

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    Are you sure we're on the same page? The pair went the other way of the release 2 minutes later
     
  6. PipDog

    PipDog Corporal

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    Sorry, but you seem confused. The GBPUSD should of went UP, not down as it did...if the move was to be based on the CPI news. If you actually turned a profit, good for you...but you got lucky.

    Risk aversion in play yet again. Did you look at the stock markets before this trade???
     
  7. shinodaz

    shinodaz Recruit

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    How should we look at the stock markets before trade? Sorry I'm new here but it would be great if you can share some of your knowledge on how we should go about that. Like which site and what to look out for.

    Thanks
     
  8. Boko Maru

    Boko Maru Sergeant

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    Agree you seem confused?

    Per the data released, you should have been long the GU, not short. Fact is this trade was a failure in that GU only blipped up momentarily, then completely retraced the entire move and actually went lower, not higher as it "should " have.

    Apparently you were looking for a short, and if so that's why you made money apparently, but you simply made a fortunate mistake. The correct positioning per the data (and Stavro's trade plan), was to go long.

    "About our Triggers:
    We will be looking for a deviation of 0.2% to BUY..."

    The actual deviation was +0.3. Again a buy on GU was the plan, not a sell. I actually made money on a buy at news, but had to exit quickly as it was obvious the upmove was going to be muted.
     
    #8 Boko Maru, Oct 18, 2011
    Last edited: Oct 18, 2011
  9. PipDog

    PipDog Corporal

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    Reverse Trade Plan Worked Again


    I played this as an opportunity to get short the GU. With the stock markets all down big, I was looking for a good number to drive it up, then let risk aversion take it back down. Although we did get the good number...actually, a GREAT number...it started down quickly. I captured just shy of 30 pips.

    There was no way I was taking a long GU trade on this news. I was looking for a reversal, but the speed of the whipsaw was surprising...even for a UK CPI trade. Wish I'd stayed in it...it's down over 100 pips from my entry.

    In a flat stock enviroment...risk on instead of risk aversion...that deviation should of sent the GU up 100 pips.
     
  10. Boko Maru

    Boko Maru Sergeant

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    I'm not Pip Dog but I maybe can respond. Viewing what's happening with global stock markets can give you an indication of whether markets are in risk appetite or risk aversion mode. If they are up, it's appetite; if down, aversion.

    Risk appetite=USD weakness. Risk aversion=USD strength.

    So, for today, with major indices down at the time of this UK news (risk aversion), the "default" mindset would have been to look for opportunities to go long the USD. So short GU (which is long USD) would have been the favored position to be in. And per the price action at news, this is what played out obviously. Historically a +0.3 deviation on CPI sends GU up 50-70 pips, but today it only blipped up 30 pips, then plummeted down below pre-release.

    Markets you can watch are FTSE, DAX, S&P 500 futures, ASX 200 (Aussie index), and Nikkei. A lot of demo MT4 platforms have those indices, so download like an FxPro demo and you can view them that way. Or, just use Yahoo finance and input the correct symbols for those indices and track them that way (you'll have to look up what the symbols are).

    Hope that helps...
     

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