Trading Strategy for CPI Data Release

The Consumer Price Index (CPI) release is a high-impact economic event that can cause significant volatility in the market, especially in crypto and forex. Here’s a structured approach to trade CPI data effectively while managing risk.

1. Preparation Before CPI Release

a. Check the CPI Forecast and Previous Data

• Visit economic calendars like ForexFactory, Investing.com, or TradingView to check the CPI release time and market expectations.

• Compare the previous CPI, forecast, and actual data to understand potential market reactions.

• Higher-than-expected CPI → Bearish (inflation concerns, Fed tightening fears).

• Lower-than-expected CPI → Bullish (rate cuts or easing expected).

b. Identify Key Liquidity Zones

• Mark order blocks, fair value gaps (FVGs), and liquidity pools on higher timeframes (1H, 4H).

• Look for buy-side liquidity (above swing highs) and sell-side liquidity (below swing lows) where smart money may hunt stops.

• Price often sweeps liquidity before the actual move happens.

c. Reduce Leverage & Manage Risk

• High volatility = high risk.

• Avoid overleveraging, as slippage and spread widening can trigger stop-loss prematurely.

• Set alerts instead of instant market execution.

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