The SNB Interest Rate Decision is a high impact news event that is closely watched by investors across the currency market.
The Swiss National Bank (SNB) governing board members meet to agree on where to set target range for the rate.
Investors are keen on this event risk with an eye on interest rate changes, knowing fully that short term interest rates are the key factor in currency valuation.
Fundamentally speaking, a higher than expected rate is bullish or positive for the Swiss Franc, while a lower than expected rate is bearish or negative for the Swiss Franc.
The following trading strategy takes advantage of the SNB Interest Rate Decision news event. Learn the rules for buy and sell trades after the release.
Chart Setup
MetaTrader4 Indicators: Doda-Donchian.ex4 (width modified), Coppock.ex4 (default setting)
Preferred Time Frame(s): 1-Minute, 5-Minutes, 15-Minutes
Recommended Trading Sessions: After news release
Currency Pairs: Swiss pairs (USD/CHF, EUR/CHF,..)
Download
Download SNB Interest Rate Decision Trading Strategy
Trade Example (Click the image for full size)
Fig 1.0
Strategy
Long Entry Rules
Enter a buy position 20 minutes after the SNB Interest Rate Decision announcement if the following conditions or rules apply:
- If a bullish candle opens and closes above the red dotted line of the Doda-Donchian custom indicator, while its upward pointing arrows forms around the tips of the candlesticks, a buy order is most suitable.
- If the red histogram of the Coppock custom indicator forms above the 0.00 level, a buy signal is in place.
Stop Loss for Long Entry: Place stop loss below support.
Exit Strategy/Take Profit for Long Entry
Exit or take profit on position(s) if the following chart or indicator patterns are in display:
- If a bearish candle closes below the red dotted line of the Doda-Donchian custom indicator, it is a signal that upward pressure is weaning and a reversal is underway.
- If the red histogram of the Coppock custom indicator thins out into the 0.00 level, it denotes a possible breakout in price action and a subsequent lower histogram below the 0.00 confirms our exit or take profit strategy.
Sell Entry Rules
Place a sell order 20 minutes after the event risk hits the wire if the following chart or indicator patterns are in display:
- If a bearish candle opens and closes below the dotted line of the Doda-Donchian custom indicator, while its downward pointing arrow forms on the lower shadow of the candlesticks, a sell alert is in place.
- If the red histogram of the Coppock custom indicator forms below the 0.00 level, a sell is in place.
Stop Loss for Sell Entry: Place stop loss above resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit on position(s) if the following conditions are met:
- If a bullish candle closes above the red dotted line of the Doda-Donchian custom indicator, it indicates an exit or take profit trigger.
- If the red histogram of the Coppock custom indicator retraces and disappears into the 0.00 level and then forms above the 0.00 level, it is an exit or take profit trigger.
Free Download
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About The Trading Indicators
The Coppock.ex4 custom indicator is a technical study that is built on three different Moving Averages i.e. Exponential, Linear Weighted, and Simple Moving Averages as it traces trend along on the chart.
Seemingly, the Doda-Donchian.ex4 is a custom indicator designed by Gopal Krishan Doda and is popularly known as the turtle indicator.
It is a trend following indicator that uses the EMA (120) along with other values to eliminate noise when scanning the market for trend changes.