7/2/2013 RBA Rate Statement / Cash Rate (0030 EDT)
Forecast: 2.75%
Actual: 2.75%
TRAP TRADE
Started @ 0.9173
Trap Trade:
1st Peak @ 0.9187 – 0030:06 (1 min)
14 ticks

Reversal to 0.9159 – 0030:26 (1 min)
-28 ticks

Pullback to 0.9175 – 0030:52 (1 min)
16 ticks

Extended Reversal to 0.9108 – 0103 (33 min)
67 ticks

Pullback to 0.9131 – 0131 (61 min)
28 ticks

Notes: Australia’s central bank left interest rates unchanged as expected due to the surprise rate cut two months earlier, citing global growth running a bit below average this year, with reasonable prospects of a pick-up next year. Commodity prices have declined further but, overall, remain at high levels by historical standards. This caused a long move of 14 ticks followed by a 28 tick reversal, then a 16 tick pullback on the :31 bar. We recommended a trap trade with this report with a 20-25 tick offset. That would have been too large in this case as the 100 SMA or PP Pivot would have been a good anchor point around 0.9171. So anything over 15 ticks would not have filled. Cancel the order after 3 bars do not fill. After the initial indecision, the statement caused a bearish sentiment to prevail as it sold off for about 67 ticks in the next 30 min, eclipsing the S2 Mid Pivot, then it pulled back for 28 ticks in the next 30 min, crossing the 50 SMA.

5/7/2013 RBA Rate Statement / Cash Rate (0030 EDT)
Forecast: 3.00%
Actual: 2.75%
SPIKE/REVERSE
Started @ 1.0209
1st Peak @ 1.0150 – 0032 (2 min)
59 ticks

Reversal to 1.0168 – 0033 (3 min)
18 ticks

Notes: Australia’s central bank cut its key interest rate by 25 BP to a record low of 2.75 percent to boost economic growth, in a move that surprised many analysts after signs of weakness in China’s economy and softer than expected inflation data. This caused a large short move of 59 ticks due to the surprise cut that bottomed on the S3 Pivot as the :32 bar was starting. With JOBB, you would have filled short at about 1.0198 with 4 ticks of slippage, then seen it fall and hover in a tight range at the bottom of the bar. As the initial low hit 1.0154, Wait until the :31 bar expires and then look to exit at or above the S3 Pivot at 1.0151 with about 45 ticks. After the peak, it reversed quickly for 18 ticks on the :33 bar, finding resistance at the S3 Mid Pivot. Then it chopped sideways between the S3 Pivot and S3 Mid Pivot for about an hour. As this was unexpected, it completely changed the trading range of the market by about 50 ticks to the downside.

11/5/2012 RBA Rate Statement / Cash Rate (1730 HI time / 2230 EST)
Forecast: 3.00%
Actual: 3.25%
SPIKE/REVERSE
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.