So, each of us as traders do tech analysis to figure out what the other traders, worldwide, are thinking after the release of the same news report that we all read. How has that caused all of the tension in the market instead of one directional move. It’s the same info nothing special or different, or maybe I’m missing something? Who can share their perspective on this?
The same chart will lead to different conclusions from different participants because they have different objectives.
Bank A may have more EUR than their clients now require, or they expect their clients to require less EUR. Or they have not enough USD for their clients or what they expect their clients to need. So they already have reasons to sell EUR and/or buy USD. These are the big institutional players who are actually buying currency, not punting on the exchange rate. These are the players who move price, its not us.
Bank B might have the opposite issues, so they end up buying EUR and/or selling USD.
Of course Bank A might have more business to do than Bank B and this would suggest the EUR/USD exchange rate is going to fall. f this has been the case for multiple banks for a long time, the exchange rate will almost definitely fall. and we see the results of this as a downtrend.
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Traders use charts to analyze their performance and to find trading positions.
What is reflected on the charts are order flows that move price action. No orders = no price movement. Hence when a major news report is about to be released the large financial institution focus on their positions, which might need to be added to or reduced, in accordance with their currency exposure risk.
BTW, retail traders can only sit on their coat tails - they have zero effect on price action.
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Actually, we all have the different way of chart reading; traders are making money according their own trading skill; maybe now you are bullish on Gold; but according to my own analysis I’m bearish! That’s the story actually!
It’s the big institutions and countries which move the markets, think like them
The movement of a currency over several time frames is graphically represented on a Forex chart along with overlays, technical patterns, and indicators.
How about these thoughts for a Monday morning? -
- price charts don’t predict the future, they are pictures of the past
- price charts aren’t made by traders or brokers, the banks make them
- charts do tell you what you should do next because most of the time what will happen next will be the same as what happened before
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I was about to reply but you have explained it so well. The price action that we see on the chart is surely influenced by how the market makers would react to the news. That makes sense.
Well, they employ better analysts than any of use could ever dream of being, with enough computing power to fly a star-ship.
If anyone is suspicious that brokers are rigging prices against them, its worth considering how far can a big broker afford to push a forex pair price? - Surely not many pips on one of the big pairs. And who would be safe from such a tactic? - Everyone working time-frames of hours or longer.
My perspective is that the why doesn’t Matter to us traders… Specially when based on tech. analysis
You just need to have your strategies and trade based on them.
It doesn’t Matter why price created tension after a news release … Who cares? You just need to Focus on your strategy… is there a trading oportunity in the chart or not? That’s all we care about
charts are made for stop hunting ,sad truth
I’m just a humble retail trader but after years of whatching screens , discounting the tight contraction periods
It’s one of three
Manipulation
Chaotic
Deliberation
I have seen traders focus on entering just after price broke a strong resistance/support zone and taken out everyone’s SL, then watch price return to previous trend.
Watching price break those zones by just enough to wipe out the retail traders seems like evidence of SL hunting to supply liquidity.
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