Trading News Events: U.S. Gross Domestic Product (GDP) - First Contraction in Growth Since 1Q 2014
Why Is This Event Important:
Even though the Fed pledges to look past the economic weakness drive by
transitory factors, a larger-than-expected contraction in the growth
rate may spur a further delay in the central bank’s normalization cycle
as it undermines expectations for a stronger recovery.
Nevertheless, increased business outputs paired with the expansion in
private-sector credit may offer a better-than-expected GDP print, and
prospects for a stronger recovery may spur a bullish reaction in the
dollar as the Fed remains on course to remove the zero-interest rate
policy (ZIRP) in 2015.
How To Trade This Event Risk
Bearish USD Trade: Growth Rate Contracts 0.9% or Greater
- Need to see green, five-minute candle following the GDP report to consider a long trade on EURUSD.
- If market reaction favors a short dollar trade, buy EURUSD with two separate position.
- Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward.
- Move stop to entry on remaining position once initial target is hit; set reasonable limit.
- Need red, five-minute candle to favor a short EURUSD trade.
- Implement same setup as the bearish dollar trade, just in reverse.
EURUSD Daily
- Failure to preserve the near-term downward trending channel may generate a larger rebound in EUR/USD and spur a consolidation phase in the days ahead.
- Interim Resistance: 1.1180 (23.6% expansion) to 1.1210 (61.8% retracement)
- Interim Support: 1.0790 (50% expansion) to 1.0800 (23.6% expansion)
4Q 2014 U.S. Gross Domestic Product (GDP)
EURUSD M5: 19 pips price movement by USD - GDP news event:
