When I trade on days that nonfarm payroll report is set to be released, I look for a technical setup that will confirm or support either the market’s belief in what is expected to happen or if there is no trade available I will wait until the news is released.

Either way, I look for a technical setup to confirm the economic data.

On occasion I will get an entry candle according to my trading method before the release of nonfarm payroll data. Usually however it is the candle immediately after nonfarm payroll is released. What I am particularly looking for is a specific candle pattern. An engulfing candle, Morning Star or evening star depending on the direction. I wait for the candle to close and this gives me additional time to confirm the release of the numbers and watch market reaction to it.

Below I put together eight charts on the euro/USD.

Each chart is a 30 minute chart and it shows the development of each candle leading up to nonfarm payroll and immediately after.

I made notes on the charts indicating where there was a technical setup that developed moments before or after the economic data was released (nonfarm payroll).

Back testing your trading method is a good idea and helps develop confidence in your trading system. It is also a way of role-playing any possibilities that may develop but always expect the unexpected.

Remember if you do not see your trading method or your set up, do not trade.