Nov 052012

6A 12 12 (1 Min) 11.05.12

11/5/2012 RBA Rate Statement / Cash Rate (1730 HI time / 2230 EST)
Forecast: 3.00%
Actual: 3.25%
Started @ 1.0333
1st Peak @ 1.0408 – 1731 (1 min)
75 ticks

Reversal to 1.0363 – 1732 (2 min)
45 ticks

Peak @ 1.0401 – 1745 (15 min)
68 ticks

Reversal to 1.0386 – 1815 (45 min)
20 ticks

Notes: With continued economic growth softening in Australia and abroad, and risks to the global outlook , expectations were strong for the RBA to cut interest rates by another 25 BP. They shocked everyone and decided against cutting, citing the total 1.5% cut from 1 yr ago working to lower borrowing interest rates and increased incentive for investors. This caused a large long spike that rose over 75 ticks in 2 seconds. With the market trading slightly bearish before the news in a tight range, it was prime to react long to the outcome. With JOBB you would have filled with about 20 ticks of slippage at 1.0359. Then you would have an opportunity to close out quickly with about 15 ticks. If you were patient and waited for the rally in the 15 min following the spike, you could have secured 30 or more ticks. Be wary of the R3 Pivot which normally serves as strong resistance. As the spike shot up quickly and crossed all 3 major SMAs, and the R1-R3 Pivots, it was unable to sustain its climb and retraced after 2 sec to hover between 1.0366 and 1.0380 for the rest of the bar to leave 43 ticks on the wick naked. The initial reversal came back up to 6 ticks below the R3 Pivot before rising again to a peak 7 ticks lower than the 1st peak. Then volume dried up and it traded in a tight range.