Flag And Pennant Forex Trading Strategy on US Core CPI

The U.S. Core Consumer Price Index also known as Core CPI is a gauge for the “true cost of living” in the United States.

It is this event risk that pushes the Federal Reserve Bank to hike/cut interest rate, thus making it a widely monitored data.

On another hand, the Flag and Pennant forex trading strategy can be used in pin-pointing important trading opportunities when they do occur i.e. during U.S. Core CPI release.

Chart Setup

MetaTrader4 Indicators: Fractal_Dimension.ex4 (default setting), Flag_and_Pennant.ex4 (default setting), FractalSupportResistance.ex4 (default setting)

Preferred Time Frame(s): 1-Minute, 5-Minutes, 15-Minutes

Recommended Trading Sessions: After US Core CPI news release

Currency Pairs: Majors (against USD)

Download

Download the Flag And Pennant Forex Trading Strategy on US Core CPI

Trade Example (Click the picture for full size view)

US-Core-CPI-Forex-Trading-Strategy

Fig. 1.0

Strategy

Long Entry Rules

Place a buy position when the following rules or conditions are on display:

N.B. Owing that we’re trading the U.S. Core CPI data, we’ll wait 20-minute after the release before initiating our entry rules.

  1. If the Fractal Dimension custom indicator line turns blue and is aligned above the 1.5 level.
  2. If the Flag and Pennant custom indicator forms an upward channel, it depicts a bullish channel i.e. a bullish trend.
  3. The FractalSupportResistance custom indicator lines is used to measure support and resistance. In this case when price curve is pushing upwards, if it breaks a resistance level, it could signal that price is going to push higher –watch out for this, considering the high volatility during the release.

Stop Loss for Long Entry: Place stop loss on the FractalSupportResistance support level below entry price.

Exit Strategy/Take Profit for Long Entry

Exit or take profit on position(s) if the following chart patterns are in display:

  1. If the Fractal Dimension custom indicator line turns red or drops below the 1.5 level, it is a call to exit or take profit.
  2. If the Flag and Pennant custom indicator alters its channel away from the one already existing.
  3. If price bounces off the resistance level of the FractalSupportResistance custom indicator.

Sell Entry Rules

Enter a sell when the following chart/indicator patterns are in display:

N.B. Owing that we’re trading the U.S. Core CPI data, we’ll wait 20-minute after the release before initiating our entry rules.

  1. If the Fractal Dimension custom indicator line turns red below the 1.5 level 20-minutes after the release, it indicates a sell entry.
  2. If the Flag and Pennant custom indicator forms a downward channel, it indicates a sell entry.
  3. If price breaks the support level on the FractalSupportResistance custom indicator, it is a signal that price favors lower lows.

Stop Loss for Sell Entry: Place stop loss on the FractalSupportResistance resistance level above entry price.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit on position(s) when the following chart patterns are in display:

  1. If the line of the Fractal Dimension custom indicator turns blue or surges above the 1.5 level.
  2. If the Flag and Pennant custom indicator channel alters.
  3. If price bounces off the support level of the FractalSupportResistance custom indicator.

Free Download

Download the Flag And Pennant Forex Trading Strategy on US Core CPI

About The Trading Indicators

The Fractal_Dimension.ex4 custom indicator is an oscillator that bounces around the 1.5 level. Its line indicator changes color between red (bearish) and blue (bullish), aligned above the 1.5 level (bullish zone) or below the 1.5 level (bearish zone).

The Flag_and_Pennant.ex4 is a custom technical study that plots price channels, thereby proving credible clues to price direction.

Lastly, the FractalSupportResistance.ex4 is a custom tool that draws support and resistance level on the price chart, thereby proving great insight to price movement.

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