Why Non-farm Payroll?
The Non-farm payrolls report is one of the most anticipated economic news reports in the forex markets. It is published the first Friday of the month at 8:30AM Eastern time by the U.S. Bureau of labor statistics. The data release actually includes a number of statistics, and not just the NFP(which is the change in the number of employees in the country, not including farm, government, private and non- profit employees.). Another metric included in the data release is the unemployment rate.
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HERE IS WHAT WE ARE WAITING FOR:
After the initial move of 30pips or more, there must be a pullback at least 5 one-minutes price bars. This means that if the initial move was up, we want to see the price drop off the high of the initial move and stay below that for at least 5 bars( they don't all need to be down bars.) Preferably the pullback makes sure significant downward progress, but it must not drop below the 8:30AM price where the initial move began. If the initial move was down, we want to see the price rally off the low of the Initial move and stay above low that for at least 5 bars. Preferably, the pullback makes significant upward progress, but it most not rise above the 8:30AM price, when the Initial down move began.
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By waiting for at least a 5-price-bar pullback, you can draw a trendline across the Heights of the price bar(if initial move was up) or across the lows of the price bars.(if the initial move was down). Note: We are drawing the trendline on the price bars that compose the pull back.
If the Initial move was up, buy when the bid price breaks above the trendline. If the initial move was down, enter a short trade when the bid price moves below the trendline. This is the simplest form of the strategy and is useful in most situations. Unfortunately, it is quite general, so occasionally the pullback may not provide a trendline that is useful for signaling an entry. In such cases, the alternative entry discussed in the next section maybe helpful.
If a long trade is taken, place a stop loss one pip below the recent low that just formed prior to entry.
If a short trade is taken, place a stop loss one pip(plus the size of your spread) above the recent high that formed prior to entry.
After the Initial move, if the price pulls back more than half of the distance of the Initial move(before breaking the pull back trend line and signaling an entry, this is an alternative method. Once the price has pulled back more than 50%(can use a Fibonacci retracement tool), wit for the price to consolidate for at least two price bars. That means, the price moves sideways for at least two minutes. Draw a line along the high and low prices of those two price bars once the second bar completes and the third bar is starting to form.
If the initial move was up, buy if the bid price moves above the high of the consolidation.if the initial move was down, enter a short trade if the bid price drops below the low of the consolidation.
If a long trade triggers, place a stop loss one pip, below the low of the consolidation.
If a short trade triggers, place a stop loss one pip(plus the size of your spread) above the high of the consolidation.
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