Monday, December 12, 2011

UK CPI Y/Y 13 December 2011

UK CPI Y/Y 13 December 2011

We´ll be trading the UK Consumer Price Index (CPI) release at 4:30am NY Time today. We´ll be looking at the yearly release figure and the market could react with lots of volatility as CPI is the basic measurement of Inflation, therefore expect to see more exaggerated moves if we get a huge surprise release. Here is the forecast:
4:30am NY Time UK CPI y/y Forecast 4.8% Previous 5.0%
ACTION: GBP/USD BUY 4.5% SELL 5.1%

The Trade Plan

We are looking for a variable deviation of 0.2~0.3%. If the Inflation number increases to 5.1%, which is even higher than last months and definitely above BOE´s inflation target, we will BUY GBP/USD. If the Inflation number decreases to 4.5% or less, we´ll look to SELL GBP/USD. Historically, even with a slight difference of 0.1%, market usually overreacts. If our deviation is hit, there is a strong possibility that the market will move 50 pips immediately.
We´ll be looking to trade this release using my after-news retracement method. We´ll wait for the release, wait for market spike, and then wait for a decent retracement before jumping in. Read more