In this article and video, we’re going to look at how you can make pips with the Brexit saga that is running right now.
So, as you know, there are three rules that we abide by when it comes to finding good trade opportunities from the market, particularly from news and fundamental information.
1. The first thing you need to do is you need to find the baseline.
Let’s have a look what the baseline was. This example was from the 28th of August 2019, 8:41 in the morning.
If we look at the vide example, we can see on the Financial Source news feed in the current sentiment drivers report we saw the baseline context for the British Pound at that time.
In that report we saw that we expected the pound to remain supported due to continued talks of UK politicians coordinating to block a no deal Brexit. So basically, the pound was full of hope, and the market was hopeful that parliament could block this no deal outcome.
2. The second step is to identify the shift in sentiment.
So, with the baseline context in mind, what’s going to cause the pound to move? Well from the same currency drivers report it said that positive developments will create fresh rallies.
It also stated that negative comments or actions will send it plummeting back down towards recent lows.
So, the shift is going to be anything to either confirm that parliament have blocked a no deal successfully, or something to suggest that parliament have had that opportunity taken away from them and they’re now not going to be able to block a no deal.
So that was the context, the baseline, and then we knew what sentiment shifts we were waiting for.
3. The third step is to wait for a trigger or catalyst to cause a sentiment shift
Only 10 minutes later, after we released our currency drivers report, a headline came out saying that the UK queen would be asked to prorogue parliament, which means suspend parliament.
That basically meant that it would be less likely that parliament would be able to block the no deal. Now, since we already had the sentiment drivers report, we knew what we were waiting for.
We knew that this would send the pound tumbling. From the video example we can see that this squawk occurred at 08:50 AM.
After the release you almost eight minutes to digest this information, realize that the sentiment had shifted and realize that it had shifted in a negative direction. The reaction from that announcement sent the GBPJPY lower by well over 100 pips in a very short space of time.
From the video example, we saw on the one-minute time frame that there was plenty of time to react and digest. The price only moved in one direction, which is the beauty of trading sentiment shifts.
So, if you’re wondering how our market commentary can help you make your pips, that is a perfect example of how subscribers made money from the Brexit saga in that specific week.