ForexGen Trading Currencies

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.