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Trading the News: U.S. Gross Domestic Product

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by , 05-27-2016 at 09:44 AM (843 Views)
      
   
Trading the News: U.S. Gross Domestic Product (GDP)

An upward revision in the preliminary 1Q Gross Domestic Product (GDP) report may trigger near-term selloff in EUR/USD as signs of a stronger recovery provide the Federal Open Market Committee (FOMC) with greater scope to implement higher borrowing-costs.

What’s Expected:

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Why Is This Event Important:

With the U.S. economy approaching ‘full-employment,’ a faster rate of growth may encourage a greater number of Fed officials to vote for a rate-hike at the next quarterly meeting in June as the central bank sees a sustainable recovery over the policy horizon.

How To Trade This Event Risk

Bullish USD Trade: 1Q GDP Climbs Annualized 0.9% or Greater

  • Need red, five-minute candle following the report to consider a short EUR/USD position.
  • If market reaction favors a bullish dollar trade, sell EUR/USD with two separate position.
  • Set stop at the near-by swing high/reasonable distance from cost; at least 1:1 risk-to-reward.
  • Move stop to entry on remaining position once initial target is met, set reasonable limit.

Bearish USD Trade: Growth Report Falls Short of Market Forecast

  • Need green, five-minute candle to favor a long EUR/USD trade.
  • Implement same strategy as the bullish dollar trade, just in reverse.

EURUSD H1
The price is located below 200 SMA for the bearish market condition - price is on ranging around 100 SMA waiting for direction of the trend:

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  • for the ranging bearish in case the price will be inside 100 SMA/200 SMA area, and
  • for the primary bearish trend to be continuing in case the price will be located below 100 SMA/200 SMA area.



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