The non-farm payroll report releases by the United States Bureau of Labor Statistics contains information on the current employment situation in the US. It is generally released on the first Friday of each month at 8:30 EST.
Non-farm payroll data creates large market moves in both the
stock and currency markets. Average
price movement right after the release is about 40-80 pips depending on the
significance of the release and the price can move up to 100-130 pips before
the end of the day.
High volatility and very rapid price movements which happen within minutes
after the release provide huge profit potential. However, due to high
volatility and a large number of trades that are
being executed in a very short amount of time trading the release can result in
gaps and slippage which can lead to large losses. Therefore a good strategy
would be not to trade the breakout right after the release, but let the price
break out and then depending on chart patterns or technical indicators enter
into a trade. For example, the chart below is EUR/USD one minute chart for
December release of non-farm payroll . The release came positive for the dollar -
we see a spike down at 8:30. However if you entered into a trade in the initial
direction of the spike you would most likely end up with a loss since (as seen
below) the price started to form a bullish ascending triangle minutes after the
release. At 8:47 the price broke the 1.3277 resistance which resulted in a 54
pip rally for the EUR/USD.
A profitable
strategy would be to spot the chart formation
(bullish ascending triangle), notice that MACD is above zero signifying
potential upward move. Once these technical parameters are identified place a
buy order at 1.3287 (10 pips above the resistance) with a stop at 1.3272 (15
pips below the entry) and first profit target at 1.3217. Result – 30 pip
profit.
Add a Comment
<<Home