US Consumer Confidence Index. Impact of the news on the USDCHF currency pair

The trust of one’s own people in the stable growth of the state’s economy and satisfaction with the current situation that has developed within the country is a good sign for the confident growth and stability of any economy in the world.

There are a lot of myths about the US Consumer Confidence Index, the main one being that the data on the release of this index do not have the slightest impact on the US dollar exchange rate.

The US Consumer Confidence Index is measured by a routine survey of 5,000 households giving their opinions on the current state of the economy and their thoughts on future developments.

Simply put, thanks to the trust index, you can see how much the average consumer trusts and believes in the stability of their country's economy. Therefore, when conducting fundamental analysis on Forex, you should not forget about it.

As you understand, due to the fact that the index is measured on the basis of a regular survey of citizens, its result may not reflect the real picture of what is happening in the economy. However, due to the fact that the questions also concern the future of consumers, it has an interesting anticipatory effect, which allows investors and traders to draw conclusions about the country’s economy.

If an ordinary citizen of a country does not trust and does not believe in the prospects for the growth of his own state, then can an investor really invest his money there? Every trader who trades a currency pair with the dollar on the Forex market argues this way, so when a negative indicator comes out, we can see a weakening of the dollar, and when a positive value comes out, we can see its active growth.  

Due to the fact that the index is based on a regular survey of citizens, as a rule, the market does not react strongly to the release of news, but it is just as stupid to deny that there is no influence.  

In order to understand how to trade this news, let’s look at the behavior of the price after its release, calculate how long the price travels and over what period of time and whether we can make money on it. For the calculation, I chose the Dollar/Swiss Franc currency pair because it is one of the popular pairs, and against the backdrop of a stable Swiss economy, news releases in the United States have a noticeable effect in the form of price jumps.

Using the confidence index in Forex.

05/26/2015 was the next monthly release of the US Consumer Confidence Index indicator, and if the previous indicator was 94.3, the actual one was 95.4. This tells us about an increase in consumer confidence, and as a result, a possible increase in the chart of the Dollar/Frank currency pair. You can see the price behavior after the release of a positive indicator in the picture below:

 Judging by the chart, the price had a sharp impulse in our direction, but within 20 minutes a rollback occurred. The pullback was not global and was purely speculative, so by the time the news ended, the price had successfully overcome 45 points. Regarding the effect of the news release, it lasted 7 hours, after which the market smoothly went sideways.

The release of the US FID on June 30, 2015 also turned out to be positive. Analysts predicted an increase in the indicator to 97.3, but in fact it turned out to be 101.4. This tells us that the dollar is strengthening against the franc, which should result in an increase in the chart of the currency pair. You can see the situation on the chart after the news was released in the picture below:

 Judging by the chart, you can see that the price grew over two and a half hours and gained 76 points plus. As in the previous version, the price initially rolled back and remained sideways, but a quick and rapid surge followed.

I would like to note that after the news effect ended, the price went into a calm sideways pattern without a rapid return to the growth point.

On July 28, 2015, the IDP indicator turned out to be lower than the previous one and amounted to only 90.9 against the revised 99.8. For us, this means that there has been a drop in consumer confidence, and as a result, a weakening of the dollar, so a rapid decline should be observed the chart of the currency pair You can see how it really happened in the picture below:

On the contrary, as in the previous options, the price initially formed a pullback, moving against the price, but an hour later the news began to work itself out in all its glory and passed 35 points.
The effect of the news lasted approximately 11 hours, and the price moved towards its target with small candles. On August 25, 2015, the data on FDI turned out to be higher than previous ones, as well as higher than predicted and amounted to 101.5 against the previous 91.

This tells us about increased confidence and strengthening of the dollar, which should be expressed in the form of growth in the chart of the Dollar/Frank currency pair. The real picture can be seen in the picture below:

 The news worked perfectly, covering a distance of 60 points in an hour and twenty minutes. After the news was processed, a small sideways pattern formed, which led to a change in the direction of the current trend.

Now let's summarize the research. If we take the minimum profit from all four months, which was 35 points, and place the same stop order of 35 points, then in the end we get: 35+35+35+35=140 points. Agree, quite a good profit for four transactions, and this was taken to the minimum without using a position transfer using a trailing stop , thanks to which it would be possible to squeeze more out of the market.

Regarding the effect of the news release, as you can see, on average the price works out for at least an hour, and in some cases more. Therefore, try not to make the typical mistake of jumping out of the market and taking a couple of points on a small impulse. The news is really working, so be patient and wait for its full development.