May 3, 2012 – Forex Trading Strategy

ISM or Institute for Supply Management is releasing its PMI (Purchasing Manager Index) and its similar to the UK Services PMI as this release is targeting the services sectors. As a leading indicator, traders generally pay attention to this report for hints of economic trend.
10:00am NY Time US ISM NonManufact. PMI Forecast 55.5 Previous 56.0
Deviation: 2.5

DEFINITION:The Institute of Supply Management (ISM) Non-Manufacturing Index measures the activity level of purchasing managers in the services sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation´s currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company´s performance, which can be a leading indicator of overall economic performance.

Trade PlanU.S. ISM Non-Manufacturing PMI is better known as the U.S. Services PMI; the current expectation is above the 50 level at 55.5. This figure indicates an expansion in the services sector where 50 is the medium point for the PMI. We´ll be using a deviation of around 2.5 points in order to BUY USD and 3.5 points in order SELL USD. In the event that 58.0 is reached, we could see some USD strength and we should focus on trading against weaker currencies. If the opposite is true and a figure of 52.0 is released, expect to see weaker USD and we should trade with stronger currencies…
If our tradable releases are reached, there is a good expectation that the market will move 50 pips within the next 120 minutes, please focus on the pairs recommended above.

BOOKS FOREX

Sentiment in the Forex Market: Indicators and Strategies to Profit from Crowd Behavior and Market Extremes (Wiley Trading) - Jamie Saettele - EUR 46,96
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