Hi, I’m somewhat new (been trading on and off for several years but recently just got back into it). Can someone explain what happened in the Eur/Usd market today, and why the market moved as much as it did?
Specifically looking at the GIANT bearish candlesticks at ~7:45 and ~8:15, followed by the row of bullish between ~8:30-10:15. It moved here up and down in the matter of about 2 1/2 hours much more than it has all week.
Is there any way to predict these HUGE moves?
What causes this to happen?
I have a screenshot but it won’t let me post it due to not enough posts. To see what I’m looking at open up Eur/Usd on a 15 minute chart.
You’re probably talking about the pack of news that was released today?
The Forex market reacts greatly to world wide economic news being released. And today was a huge day for traders with tons of economic data coming in, like from the European Central Bank. Recent strings of weak inflation data has had a bad impact on exports from the EU and was starting to hurt the economy, so the European Central Bank (ECB) decided last month to take drastic measures. Today, they released all those ideas and plans. Turns out the ECB cut interest rates in order to weaken the Euro demand and lower the currency’s value. In the aftermath, the Euro dropped drastically compared to the USD.
Shortly afterwards though, the ECB also released a press statement, stating that there probably won’t be any further cutting of rates. This, among other remarks, must have been very hawkish comments and traders regained trust in the European currency, so they bought it right back, probably thinking that it won’t go lower anymore. I’m not sure, but there probably was some USD weakness involved as well, seeing as the Dollar dropped compared to many currencies.
You should check these posts, if you’re interested in what was going on. They’re very informative.
You’ll usually see some large movements after a news release, especially anything involving interest rates.
As for why the EURUSD climbed after the ECB slashed interest rates, to me it looked like a short squeeze. The market probably would’ve factored in a rate cut awhile ago, and trapped any short-sellers who tried selling on the news. The move up looked like panic to me, but that’s my opinion.
OK that makes more sense. I did manage to get about 70 pips total from that, so I’m not complaining, but I feel a more experienced trader would have made a lot more from those huge moves.
Is there a schedule for huge news releases like that?
I think you did great to capture 70 pips from that move. Anyone who tells you they sold at the exact top or bought at the exact bottom is either extremely lucky or lying. After all, if you sold at the exact top, it would mean you had little to no technical confirmation to believe the price would not continue higher. I think it’s better trading to technique to sell at a lower price and wait for more solid confirmation of a down move.
However, as I mentioned in another thread, I believe the crowd may have overreacted to the ECB. In fact, there was more opportunity to make money buying EUR/USD than selling it today.
Yes, you can get schedule in advance and the actual numbers when they are released on the DailyFX Economic Calendar. And not a moment too soon! Tomorrow’s the granddaddy of them all: Non Farm Payrolls.
As the Guys & Gals said above this was because of a news announcement. This kind of stuff you want to be aware of whenever you trade and have positions in the market.
As you see the big movement on EURUSD was caused because of the released news. I don’t think that you can predict those big moves even if you know the exact releasing time. It all depends on the trader’s personal trading strategy. Some of them will enter the trades before the report and hope that the news are going to be in their favor, and some will wait after the market get quiet and than react on it.
As a trader, you need to be aware of news/fundamentals which can move the market.
There are many technical traders out there that get slaughtered like pigs because they spot a valid trade entry based off their technical analysis and get into the trade before news comes out. Soon after, the news comes out and the trade does not go in their favored direction - this is one reason why many technical traders avoid trading around big news releases.
There are certain news events which don’t cause the markets to move as much, so my recommendation is the look into fundamental trading for a small period of time to understand which news releases do affect the market, and which ones do not.
