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Taking Trades After Bad News for the US Economy

You never know what you’re going to get when trading the non-farm payroll report on the first Friday of every month. Last month we saw stellar moves on this report giving us nice setups throughout the whole day. Today, the news was pretty bleak for the US economy, causing the euro dollar to jump 75 pips to the upside. News traders who took the pop made out pretty well on this move. We waited over an hour to take our trade, which was against the current news trade trend. We noticed price was not moving up and only consolidating below the highs of the initial move. When this happens we have a tendency to think that put options are better than calls. This is based on the already extended moved the north side.

We watched price consolidate between 1.3000 and 1.29824 for about an hour. Price eventually moved up through resistance two at the whole number and once again, came back down. We took our trade using the resistance area as a high and watched price drop off to the south side. Price eventually moved in our favor for a good several pips before closing near our entry. Since the close of our trade price has moved up near the highs of the day. Although we had a winner on this non farm payroll day it wasn’t an ideal trade that we usually expect.

In the image below you can see how price climbed the news candle. Notice how price reached a high of 1.3027. During the non-farm payroll report all lines including, support, resistance, whole numbers, are all excluded. Don’t try to take a trade based on a line at news time. Let the price action dictate what’s going to happen in the future. Once the news information has been digested you can start trading these lines as normal. Price will have a tendency to act differently during the first 30 minutes to an hour. In our case, we watched how price was coming up to resistance two once again which led us to a put option. Price eventually moved down in our favor giving us that winner.
Finding a Post NFP Trade
Price is staying up near the highs of the day. It did attempt to climb the final wick area of the news candle, but pulled back 18 pips or so. It’s currently trying to do the same thing again and will most likely challenge this area for the rest the day. At one point it will start to consolidate and most likely not give any trade signals. If you are looking later this morning or afternoon you must be cautious. It’s better to be safe and stay out of the market once we get past the noon hour. Price will have a tendency to just flat line.

Risk Disclaimer

Comments

  1. Hi Rich, great website, love the blog and YouTube channel. Thanks for all the responses to my comments on your vids.

    Question, I am using freestockcharts.com as I work 8:30am – 5:00pm so I can keep an eye on what’s going on, so unable to have mt4 during ideal hours for trading. I have noticed though that the pivot point indicator on there and it’s resistance levels are a lot different to yours which is making it harder for me to apply your PA for the day as my levels are different. Do I need to change the settings?

    My settings are:

    Bounded by: by top and bottom
    Top: max value – margin -10%
    Bottom: min value – margin 9%
    Grid lines: auto

    Not sure if you can help but I have no clue what ‘scaling’ / setting I need to have it calculate the same as your pivot and resistance/support lines.

    Thanks for reading, hope you can help.

    Kind regards,

    Danny.

    • To be honest I don’t know how to setup freestockcharts.com the way I use MT4. They have have different time frames and what not.

  2. Hello Rich,
    I don’t know how we can thank you for teaching us how to become great binary traders.I watched all the videos,the only thing i am missing is understanding the purple lines,why do you draw them and how do you choose where to draw them.Thank you again and may God continue to bless you.

    • Sorry for the late reply. I add the purple lines at whole numbers and spots where I’ve taken trades before. The one at 1.3042 has been delivering for a while now. Watch how price reacts to old winning trade prices.

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