A 600 Pip Sentiment Shift!

In this video we're going to demonstrate how Financial Source subscribers made money trading a sentiment shift involving the Brexit updates.
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In this video we’re going to demonstrate how Financial Source subscribers made money trading a sentiment shift involving the Brexit updates.

The move we’re going to be looking at is one on the GBPJPY. So, the move our Financial Source subscribers benefited from using our coaching was a 600 pip move.

Firstly, we need to understand the baseline surrounding this pair before the move took place. Now if we go inside the Financial Source terminal on October 9th, we posted one of our sentiment drivers reports for the GBP, and essentially the report said that Brexit was driving the GBP.

The current mood was negative as no one could see the EU and UK reaching an agreement. There’s always these little updates from the UK saying that they can do a deal or if not, they’ll leave.

The EU said the UK hadn’t brought any new proposals and everything was still the same as it was.

So, there was a deadlock, and this deadlock gave a lot of negativity to the GBP, which was selling off at the time before this move in GBP occurred. The next thing we need, once we understand the context is to identify the sentiment shift.

What type of market-moving shift has to occur to create a tradeable move? So, in this example, our analysis said the current uncertainty was keeping the GBP pressured.

However, any update that clarifies a final solution, one way or the other, positive or negative, would drive fresh moves. So, that means if an update could show the EU and the UK agree, that will be positive.

If there was an update confirming that a deal was never going to happen and there are no agreements ever going to be made that would cause the GBP to sell off even more. So, that was our context and the possible shifts we were waiting for.

The next thing we needed was a trigger. So, to do that, we can go back to the Financial Source terminal. On October 10th, over 24 hours later at 15:13, we had a mega headline come through. The headline said UK PM Johnson and Irish PM Varadkar, two key negotiators in the deal said that a pathway to deal was possible.

It added that they would continue to engage in discussions and a deal was in everyone’s interest. The moment this came through the wires, this was the shift away from the negativity. On the GBPJPY chart in the video example, we can see the price went up.

There was a minute candle where the pair pulled back a little bit. Then it shot up again. Essentially, there were about four or five minutes where you could have a look at what’s going on, really digest it and figure out that this was a sentiment shift.

This is a significant moment in the Brexit updates. And of course, the market then went on to rally from this moment down here, over 600, almost 600 pips.

Now there is another note on this. The reason we selected the GBPJPY at the time, was because there was a very positive risk-on tone, which caused the safe-haven currencies to sell-off.

Of course, the Japanese yen is the biggest safe-haven currency of all. So, at the same time, the GBP saw strength the JPY also saw lots of weakness. Thus we had a perfect storm between the two currencies. That risk tone lasted for a couple of days and saw the GBP rally almost 600 pips.

In the Financial Source terminal, we always posted what the ongoing risk tone was. So, everyone in the terminal knew that the risk tone was still positive. They got the headline from Brexit, they knew what they were waiting for, and essentially that’s how our subscribers caught that move.

If you’re interested in learning more about how our market commentary can help you interpret news and fundamental analysis into profitable trades like this, click the link below and check out Financial Source.

Thank you very much for watching and please post your questions or comments below this video, because we do read them all and we base our future videos on those questions that you ask.

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