Octopus Forex Trading Strategy on UK’s CPI
Generally speaking, the Consumer Price Index (CPI) gauges the adjustment in the price of goods and services from a consumer perspective.
It is a significant means to gauge fluctuations in purchasing trends and inflation.
IF the UK CPI reading comes out higher than expected, investors imply it to be bullish/positive for the Pound, while a lower than expected reading is seen as bearish/negative for the Pound.
MetaTrader4 Indicators: Octopus_1.ex4 (default setting), RealMACD.ex4 (default setting)
Preferred Time Frame(s): 1-Minute, 5-Minutes, 15-Minutes
Recommended Trading Sessions: After news release
Currency Pairs: GBP/USD
Trade Example (Click the image for full size)
Long Entry Rules
Place buy entry 20-minutes after the release i.e. the U.K. Consumer Price Index (CPI) YoY:
- If the Octopus indicator forms corresponding green bars within its indicator window, it is a sign that price is being pressured higher i.e. bullish signal.
- If the blue line of the RealMACD indicator crosses above the red line and are seen above the 0.00 level, it is a bullish alert. Consequently, if the yellow bars of the RealMACD custom indicator also aligns above the 0.00 level, the bullish signal is said to be strong.
Stop Loss for Long Entry: Place stop loss below immediate support.
Exit Strategy/Take Profit for Long Entry
Exit or take profit on position(s) when the following rules or conditions are in place:
- If the Octopus indicator bars turns red, it is a signal that price is making a U-turn.
- If the blue line of the RealMACD custom indicator crosses the red line downward, it is a signal that price is about to reverse, prompting an exit or take profit.
Sell Entry Rules
Initiate a sell position if the following chart/indicator patterns are on display 20-minutes after the release:
- If the Octopus_1 custom indicator bars turns red, it shows that price is being pressured lower, thereby signaling a sell.
- If the blue line of the RealMACD custom indicator crosses the red line downward, and subsequently the yellow bars of the RealMACD custom indicator forms below the 0.00 level, price is said to be bearish.
Stop Loss for Sell Entry: Place stop loss above immediate resistance.
Exit Strategy/Take Profit for Sell Entry
Exit open position(s) if the following rules or conditions are in display:
- Any change in the color of the bars of the Octopus indicator to green is signal of a reversal.
- If the blue line of the RealMACD custom indicator crosses the red line upwards, while the yellow bars of the forms above the 0.00 level, it indicates a reversal in trend – making eminent for us to exit or take profit.
About The Trading Indicators
The Octopus_1.ex4 is a forex trend indicator that forms bars or histograms within its main window. Green bars are indicative of a buy signal, while red bar denotes a sell signal.
The Octopus_1.ex4 can also be deployed for scalping the market and can be used alongside other technical studies like RSI, CCI, Stochastic, etc.
The realMACD custom indicator is used to pinpoint areas of overbought or oversold conditions. The indicator is comprised of the FastMA (12), SlowMA (26) and the SignalMA (9).