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Forex (Wednesday FEB 29, 2012 NY TIME 8:30am EDT) – US Prelim GDP q/q

Discussion in 'Current Forex Trading Signals' started by Stavro D'Amore, Mar 1, 2012.

  1. Stavro D'Amore

    Stavro D'Amore Former FPA Special Consultant

    Joined:
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    Hi Guys,

    Please see my trade plan

    US Prelim GDP q/q
    Forecast 2.8%
    Previous 2.8%
    Pair to trade: USD/JPY

    Numbers we need:
    BUY USD/JPY 3.1%
    SELL USD/JPY 2.5%

    Economical Impact: High
    Typical Result: Good for currency - While this is the ‘usual’ effect, under current market conditions the reverse tends to be true against some currencies. As bad data has been triggering the purchase of US bonds, I will trade EUR/USD and not consider USD/JPY on this trade.
    Occurrence: Released quarterly, about 60 days after the quarter ends
    Spike Probability: Good, we can see 45 pips on initial spike

    About our Triggers:
    US Prelim GDP q/q is forecasted to arrive at 2.8%.
    We are looking for a deviation of 0.3% either way on this trade.
    If we get 3.1% or better I will look to enter a LONG position on USD/JPY and if we get 2.5% or lower I will go SHORT ON USD/JPY.
    Should this report be triggered, we can expect to see about 45 pips on the initial spike.


    What is it? And why does the market care?
    The Gross Domestic Product (GDP) is the broadest measure of economic activity and is a key indicator for the economy's health. While this is q/q data, it's reported in an annualized format (quarterly change x4). The 'Previous' listed is the 'Actual' from the Advance release and therefore the 'History' data will appear unconnected. There are 3 versions of GDP released a month apart - Advance, Preliminary, and Final. The Advance release is the earliest and thus tends to have the most impact.

    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 will look for a 30% to 50% retracement in the original spike before entering. I will be looking at a 5 minute chart. 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 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.

    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. Please use no more than 12 pip limit order.

    Historical Chart and Data for US Prelim GDP q/q

    Have a great restful weekend.

    All the best

    Stavro D’Amore
     

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