New-Zealand CPI Spike trade signal – This can be a great spike trade. As well as a superb Afterspike retrace trade. 
Spike Trade YES
Spike Retrace YES.. normally.. but not this time!
We trade this on NZDUSD, which is a slower moving currency.. so heavy in spike retraces are not to common… which is exactly what we like!
Tradable on
NZDUSD … maybe AUDNZD if you have a broker with stable spreads!
Things to watch
There are three complications with this trade……
1) CPI trades are not really in focus now… with the financial crisis showing no signs of letting up, CPI trades have lost some of there “pizazz” this is because CPI directly filters through to Interest rate moves, but at the moment the central banks have bigger things to think about than CPI figures, so the tradable deviations need to be adjusted accordingly.
2) NZD trades can fail to provide continuation, if there is some major Australian news the same evening…. it seems the market will spike, and wait for the Aussy news to hit, before making further moves. In which time some nasty retraces can occur. Tonight we have “Australian Employment” scheduled just a few hours later. So we need to be careful!
3) Make sure the Y/Y figure a) Deviates b) Deviates in the same direction… if this isn’t the case, the close out FAST!
Previous Releases -
This has made us some serious money in the last few releases! 
Oct 2011 -We had a large SELL trigger from a minus 0.3, and we saw a nice 40 pip spike, we didn’t get much continuation on this trade, but it did make an equal low 1 min later… We didn’t expect much continuation as “RBA Deputy Gov Battellino” was speaking a few hours later so we knew that the market wouldn’t get too over excited. 
watch it here……
Jul 2011 -This came out a few seconds early, We had a small buy signal from a +0.2 .. nice 22 pip spike and rolled on to 45 pips…we managed to catch the entire move.
watch it here……
Apr 2011 - Dev of -0.2, another great trade.. with a 29 pip spike pushing on in the 2nd min.
What to expect – Trigger sizes
0 – 0.1 = Dont trade
We will probbaly get a small “blip” and a hard retrace…. we dont want to take a trade in these circumstances. We only trade if we are 90% sure we will be safe!!!
0.2 = Small trigger (only with tight slippage control)
We should see a reasonable spike….but i think that we still need to be cautious..so only set up for a small trade on this size deviation. Make sure your using the correct forecasts, and watch the Year on Year figures, at these Devs it more likely that we will get a conflict.
0.4+ = Large Trigger
We should see a nice size spike, but don’t put crazy money on, this is still not the best times to be trading CPI´s
Trade Plans
Spike Trade (with Autoclicker) = Take 80% of at the end of the initial spike… then leave 20% for Continuation. Its still possible it may push on a bit.
Spike Retrace (Manual Entry) = If you really must trade this today then I suggest…
After the spike, if a “small” retrace occurs within the first 20 seconds, back to around 80% of the Spike, then enter as the tick chart starts turning back in the direction of the spike.
Historical Charts
