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In this article and video, we’re going to demonstrate how Financial Source brings you market moving news and how you can turn that into pips on a regular basis.
This example is from August the 13th, 2019, and the first important point was that our dominant currency sentiment released in the Financial Source Terminal was short Euro and long Yen.
The key reason why we were long Yen and short Euro at that time was due to the ongoing trade war between the US and China. That was the reason why everyone was buying the safe-haven currency of the Japanese Yen and it was keeping the Yen pairs kind of forced lower.
Now, just to give you an insight here, from the video example you’ll see how many days we were long on the Yen purely because of the risk sentiment. So, what happened to give us a trade on the EURJPY?
Well, 13th of August 2019, we had a relief from this trade tension. There was an announcement which came in on the headline feed at 14:44 that said some of the key products had been removed from the tariff list and the tariffs are not going to be applied until December 15th.
Now this is the headline; usually takes a couple of minutes to come through. But the Audio Squawk powered this through the speakers at around about 14:42, so it’s always about two minutes before the headline is written.
Now, if we look at the EURJPY chart in the video example we can see we had ample amount of time to catch this move after the audio squawk came out. Even if you waited for the written headline, which was at 14:44, you still had about two minutes to react.
After the release price went up over 140 pips. So essentially, the terminal, the news as it broke, allowed you to realize what was going on, realize there’s been a change in sentiment and the market moved aggressively off the back of that.
Now, there’s two ways to trade this. First of all, you could have caught this initial move. If you had your Squawk on if you’re day trading, this is how day traders operate basically, they wait for this type of news and they take profits from fair value levels.
The other way is to wait for the first pull back. When you get such a move, a big breaking move, the first way is to trade it from the squawk. The second way to trade it is to wait for the first pullback.
Now, we suggest using the 50% level Fib level as an entry place for the pullbacks. You can use any level you want, but the 50% is always a nice, reliable pullback level.
As we can see from the video example, the price came down, but then pulled backed from an important leve. So, if you were paying attention you could have had two opportunities to get involved in this move.
You have the first move, which you’ve usually got plenty of time to get in if you’re using the Audio Squawk. Then you’ve got the second opportunity, which is a pull back to the 50% pullback, which is your first pullback since that news broke. I hope these trade examples are useful.
That’s essentially how Financial Source gives you the breaking news and the market moving information to help you make money when the sentiment shifts, and currency prices move in direct reaction to it.