Thursday September 15, 2011 NY TIME 8:30am EDT – US CORE CPI

Stavro D'Amore

Former FPA Special Consultant
Hello members,

Please see my trade plan for US Core CPI, I hope you find this information informative and educational too.

Previous 0.2%
Pair to trade: USD/JPY and EUR/USD
Estimated Pips: 40 pips on initial spike

The numbers we will look for:
BUY USD/JPY at 0.4%
BUY EUR/USD at 0.0%

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

Pip range estimated on last release

About our Triggers:
We will be looking for a deviation of 0.2 % to BUY USD/JPY and -0.2 to BUY EUR/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 Core Consumer Price Index (CPI) measures the changes in the price of goods and services, excluding food and energy.
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 US.
The common way to fight inflation is raising rates, which may attract foreign investment

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

Pre News
Approximately within the 15 minutes and up to 2min prior to the news release I will be looking for a short term SHORT position using USD/JPY pair.
I would be out of this trade 2 minute before the actual release, or to avoid any spreads that should widen to protect my self.

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 USD/JPY 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.

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 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 for a total of 30 mins.

Historical Chart and Data US CORE CPI

All the best

Stavro D’Amore
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