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NFP Friday news preview 1-8-2010

Discussion in 'Commercial Trade Journals' started by Sir Pipsalot, Jan 8, 2010.

  1. Sir Pipsalot

    Sir Pipsalot Former FPA Special Consultant

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    Because of the big news trading opportunities, I am focusing today's signal solely on the news events. Enjoy.

    0700 CAD Employment Change (20K expected) - Look out for leaky price action on this one. 2 months ago, the -50K+ deviation had a relativey muted move after the release because it seems the report was leaked at some point earlier (minutes, hours, hard to tell), but last month's +50K+ deviation had an amazingly strong move since there was no leaky price actions. Look out for strong momentum heading into the report as a sign of a rumor or leak that will make you want to either chase it for a quick small trade, or stay out completely. Otherwise, we'll take a more standard approach with our triggers below.
    If it comes out at 40K or higher, USD/CAD should fall 50 pips.
    If it comes out at -1K or lower, USD/CAD should rally 50 pips.

    0830 NonFarm Payrolls and Unemployment Rate (0K and 10.0% expected) - The analysis put forth the last several months worked very well in forecasting the moves after the NFP/UR releases. In fact... this type of outlook has worked for 5-7 months straight now. This month is a bit different with the new year, and the potential of positive job growth eagerly anticipated, but these guidelines have been solid so no reason to abandon them just yet. Anyways, here's the breakdown:

    FYI, watch out for revisions to prior months and pay attention to Unemployment Rate (10.0% expected) and make sure it agrees in order for the move to behave as I'm describing. What you should trade on this depends on how you want to trade the report. The last several months I've identified a tendency that has paid off consistently on NFP so far. Here's the low-down:
    1) EUR/JPY (and similar yen crosses) will likely have the sharpest initial reaction as EU and UJ likely spike in the same direction. The triggers I provide will focus on EUR/JPY.
    2) USD/JPY will likely have the most sustained move, so this is the best pair for Felix-style retracement opportunities or chasing momentum if necessary. Typically the move will hold up for over an hour.
    3) EUR/USD (and other USD majors) will usually stage a whipsaw which can set up for an excellent reversal trade. Sometimes it's fast within 1 minute or two, and sometimes it can take 5-10 minutes to reverse. Usually though the initial risk based move turns into a USD affair with EU & GU turning around and heading the other way, sometimes very dramatically. In other words, good news will spike up EUR/USD but it will likely turn around and sell off harder fairly quickly. Bad news will do the opposite. It's possible that we've finally done this enough times though that we may not get that initial dummy move, but we'll have to wait and see. Look at charts over the last several months here at the FPA for more info:
    Forex News Trading | Details and History for USD Nonfarm Employment Change

    Suggested Triggers:
    A) (Good NFP/Norm to Good UR) If it comes out at 75K or higher with no major back month downwards revisions and unemployment rate at 10.0% or lower, EUR/JPY should rally sharply by 80-100 pips.
    B) (Bad NFP/Norm to Bad UR) If it comes out at -75K or lower with no major back month upwards revisions and unemployment rate at 10.0% or higher, EUR/JPY should fall sharply by 80-100 pips.
    C) (Norm to Good NFP/Good UR) If it comes out between -25K and +75K with no major back month downwards revisions and unemployment rate at 9.8% or lower, EUR/JPY should rise by 40-70 pips.
    D) (Norm to Bad NFP/ BAD UR) If it comes out between -75K and +25K with no major back month upwards revisions and unemployment at 10.2% or higher, EUR/JPY should sell off by 60-100 pips.
    E) (Strong revision conflicts) If there are major back month revisions that conflict with the surprise on the current month, I would stay out of the mess and just look to scalp the volatility with your technical tools.


    That's all for today's update. If you'd like to learn more about trading or trade along with myself and my collegues, come join us at Profit Mongers. Our subscription is very reasonable at $179 per month, and right now you can sign up for a 2 week trial to get started for only $29. This offer is for new customers only.

    To our success!
    Sir Pipsalot
     
    #1 Sir Pipsalot, Jan 8, 2010
    Lasted edited by : Sep 8, 2016
  2. cosmopolit

    cosmopolit Private

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    Thank you. Your post was helpful.
     

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