AUTHOR: MOLEPO LJ
NEWS DIRECTION DICTATOR (NDD)
Currencies traded:
USD
CAD
AUD
NZD
GBP
EUR
Events traded:
Employment Change
NFP
Interest rates
GDP
Retail sales
CPI
Based on:
15min timeframe
Support and Resistance
M and W formations
Head and Shoulders
Pairs traded:
For AUD:
GBPAUD, EURAUD
For NZD:
GBPNZD,EURNZD
For USD:
GBPUSD,EURUSD,XAUUSD
For CAD:
USDCAD, GBPCAD, EURCAD
For GBP:
GBPUSD, GBPCAD, GBPNZD, GBPAUD
For EUR:
EURUSD, EURCAD,EURGBP, EURNZD
ART OF TRADING THE EVENTS:
Fundamentals depends heavily on the economy’s stats of the
currency you will be trading. Even though they are stat-based,
trading is nothing less than an ART. From time to time you will find
that the data released for that economic event do not correspond
with how the market reacted. Some might refer to it as manipulation
but I call it ART. When it comes to fundamentals, the more the
confirmations to support your analysis the better because there are
lot of factors at play. Each and every currency has its own way of
being traded and being familiar with its art will put you in a better
position of being profitable and consistent with your profits. The
aim is not to be greedy, but to take our fair share from the market.
Respect the game and the game will reward you.
AUD and NZD
AUD and NZD are traded similarly because they are in the same
session referred to as the Sydney session. You can refer to them as
the Sydney twins because what most happen to one happen to the
other even though the impact is not the same. Their correlation
during events is at the majority of times visible.
ART OF TRADING AUD AND NZD:
Common Behaviour before the event:
Aggression in the direction which gets opposed during an
event.
AUD and NZD usually take on a continuation pattern during an
event, so most of the time when there is an aggression in a
certain direction during the day that direction is more likely to
hold during an event. The daily trend will not be our main focus
when doing our prediction but the minor
movement(aggression) that took place in the last 1h:30( six
15min candlesticks) will be since there will be instances
where a correction occurs. The daily trend should serve as
one of the confirmations if it supports your analysis for that
event.
The market usually render two opposing setups, common
setups, such as a “Head and Shoulders” and a “W-formation”.
The two setups both have a chance of being completed, but
your job as an analyst is to find out which one has a greater
chance of being completed during the event. Your first task is
to spot where the “minor aggression” is heading, if it supports
the completion of the “Head and Shoulders” before the event
occurs, the candle for the event has a greater chance of
completing the “W-formation”.
Let’s get more graphical with the information:
INTERPRETATION OF THE PICTURES:
Picture 1
Two visible setups before an event, possible “inverse
Head and Shoulders” and an “M-formation”. The one that
got completed was the M-formation, not because the
inverse Head and Shoulders had no chance of being
completed but because of the false aggressive upward
movement which occurred before the event.
Picture 2
The inverse Head and Shoulders was successfully
completed due to the prior downward false aggressive
movement. The false aggressive movements respect a
certain level of SUPPORT and RESISTANCE as it did in
picture 2. A level of support was obeyed and the market
bounced off quickly to complete the setup.
PICTURE 3 and 4:
True illustrations of the behaviour of NZD and AUD
events before and during the event. No clear setup just
the market playing with aggression. That is where
Support and Resistance surely comes into play to
support the aggression you spotted before the event.
The market took on downward and upward directions
respectively, which both got were opposed during an
event. The aggression was nothing but a false move.
USD and CAD, GBP and EUR:
USD and CAD are traded the same because they are in the same
session known as the New York session. GBP and EUR are also
traded the same because they are in the same session known as
the London session. The correlation between the two (USD and
CAD) occurs most of the time where the impact is more or less the
same. A USD event can affect the CAD with a pip difference which
is not that wide. GBP events do not affect EUR’s events, even
though they are in the same session they most of the time act
independently of one another.
Common Behaviour before the event:
USD and CAD respects technical most of the time. What will be our
main focus when it comes to trading USD and CAD events will be
the area of SUPPORT AND RESISTANCE, which means you must
have a strong knowledge of SUPPORT AND RESISTANCE. During
events, there are no pairs that respect the level of support and
resistance more than USD and CAD. The first thing to do when
analysing is to spot the closest area of support and resistance
which has a higher chance of being tested before the event takes
place. The four currencies usually take on a “correction” behaviour
more than a “continuation” one. Respecting the level of support and
resistance goes against the prior trend in motion.
Let’s get more graphical with the information:
INTERPRETATION OF THE PICTURES:
Picture 1 and 2:
The candle for the event completed the Inverse Head
and Shoulders. The setups (M-formation, W-formation,
Head and Shoulders, Inverse Head and Shoulders) are
very common in the market but what you might not
realise is that they are all based on an area of SUPPORT
AND RESISTANCE. Before the event, the second
shoulder of the Inverse Head and Shoulders re-tested a
level of support before surging upwards. A re-test by the
second shoulder which respected a level of support in
which the first shoulder is based on should give you
something to think about. The shoulders do not have to
be equal for a Head and Shoulders or Inverse Head and
Shoulders to be completed successfully. If you are able
to spot a Head, the first shoulder, first leg and a forming
second shoulder which respects a certain level of
Support or Resistance expect a possible second leg to
be completed during the event.
Picture 3:
This picture clearly shows how the events take on a
correction behaviour more often than continuation. You
have to be in the correct technical move in order to trade
the events for GBP, CAD, EUR and USD successfully.
MAXIMIZING YOUR PROFITS:
Note: On NZD, AUD, USD, CAD only
Depends heavily on:
THE INITIAL DIRECTION
PROCEDURE:
Open an “Execution order” with a lot size which allows
your account to withstand a drawdown of 30pips.
If it’s a BUY, put a “Buy Stop” 15pips above the market
price with a lot size (add 0.05 to the one used for
execution) bigger than the one used for the “Execution
order”. The pending order must be ready before the
event occurs. Both the “Execution order” and the “Buy
Stop” Take Profits (TPs) [TP=40pips] must be placed on
a similar price so that they get hit at the same time.
If it’s a sell, place a “Sell Stop” 15 pips below the market
price with a lot size (add 0.05 to the one used for
execution) bigger than the one for execution. The
pending order must be ready before the event. Both the
“Execution order” and the “Sell Stop” Take Profits (TPs)
must be placed on a similar price so that they get hit at
the same time.
THE EVENTS SHOULD BE TRADED ON THE SPECIFIED
CURRENCY PAIRS IN THE BEGINNING OF THIS
STRATEGY.
MAXIMIZING YOUR PROFITS ON VOLATILE INTEREST RATES:
USD and CAD usually take a solid direction so they are not to be
included.
NOTE: Used only on GBP, EUR, AUD and NZD interest rates. The
Pending orders must be ready before the event
Depends heavily on:
THE INITIAL DIRECTION
Procedure:
Open an “Execution order” with a lot size which allows your
account to withstand a drawdown of 30pips
If it’s a Buy, place a “Buy Stop” 15 pips above the current
market price with a lot size bigger than the one used for the
execution order.
Put the Take Profits (TPs) for both the Execution and Buy
Stop orders at the same price. For AUD and NZD, the TP=
40 pips and, For GBP and EUR the TP=30.
On the same price you put your TPs, place a Sell limit so
that when both the Execution order and the Buy Stop Order
(If it got triggered) hit the Take Profit, the Sell limit order
gets triggered as well. The Stop loss for the sell limit should
be placed at 30pips with its TP at 30pips (the same price of
the execution order). AUD and NZD at times take on a solid
direction, so the SL should prevent severe losses. Where
the TPs need to be adjusted, I will notify you.
If it’s a sell, place a “Sell Stop” 15 pips below the market
price with a lot size bigger than the one used for the
execution order.
Put the Take Profits (TPs) for both the Execution and Sell
Stop orders at the same price. For AUD and NZD, the TP=
40 pips and, For GBP and EUR the TP=30.
On the same price you put your TPs, place a Buy limit so
that when both the Execution order and the Sell Stop Order
(If it got triggered) hit the Take Profit, the Buy limit order
gets triggered as well. The Stop loss for the Buy limit should
be placed at 30pips with its TP at 30pips (the same price of
the execution order). AUD and NZD at times take on a solid
direction, so the SL should prevent severe losses. Where
the TPs need to be adjusted, I will notify you.
“You have not come this far just to come this far”. We have
to win by any means necessary. Let’s get this dough…
