Forex Signal (Wednesday April 25, 2012 – 5:00pm EDT) – NZ RBNZ Interest Rate Statement

Today we have NZ Interest rate due to come, this will most likely be a no trade.

NZ Interest rate
Forecast 2.5%
Previous 2.5%
Pair to trade: NZD/USD

Numbers we need:
BUY NZD/USD 2.75% or greater
SELL NZD/USD 2.25% or lower

Economical Impact: Critical
Typical Result: Hawkish , Good for Currency
Occurrence: 8 times per a year,
Spike Probability: Good, we can see 50 pips on initial spike

About our Triggers:
If RBA increases interest rates, we should SPIKE in NZD of 50 pips and I will buy NZD/USD or other NZD crosses.
At the present moment, the expectation for a rate movement is low and we could see some NZD sell off prior to the news.

What is it? And why does the market care?
The decision by RBNZ (Reserve Bank of New Zealand) on where to set interest rates depends mostly on growth outlook and inflation . The primary objective of the central bank is to achieve price stability.
High interest rates attract foreigners looking for the best “risk-free” return on their money, which can dramatically increases demand for the nation’s currency.

A higher than expected rate is positive/bullish for the NZD
A lower than expected rate is negative/bearish for the NZD.

Method I use to trade this:
Stavro D’Amore Trading Method
Pre News
There will be no pre news trading.

Spike
I will be ready to trade SPIKE on this release, using 15 pip limit orders/ bounds to protect myself. There is a strong chance that this will be a No trade

After spike
I will only trade after spike if our initial triggers are hit. I will look for a 30% retracement in the original spike if our triggers are hit 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 analyze this.

Historical Chart and NZ RBNZ Interest Rate

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