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We’re going to demonstrate how Financial Source subscribers made money trading a sentiment shift involving the Global health concerns due to the breakout of the Coronavirus this week…
The move we’re going to be looking at is this one here on AUDJPY Pair. So, let’s break this down and see how you could have predicted and caught this move, using our market commentary.
So, firstly we need to understand the context or the baseline surrounding this pair before the move took place…
Inside the Financial Source Terminal on the 21stof Jan, we released our Dominant Currency Sentiment report.
And in the report, we saw that the current short-term baseline or bias for the AUD was to the downside given that the market was in a risk-off tone due to the breakout of the Coronavirus and its possible implications for global growth.
The market was also pricing in a 53% chance of a rate cut by the RBA which provided a more medium-term fundamental bearish outlook for the Australian Dollar.
Once the baseline was in place the next step is to identify the type of breaking news that would generate the biggest market moving shift…
In the terminal again on the 21st of Jan where we released our Tradable Sentiment Shifts report which clearly highlighted that the we needed to watch out for any further escalation in the Coronavirus as it will likely to see a flight to safety by market participants which would have seen further downside in the AUDJPY.
Now also in the terminal under our video commentary section we released a couple of detailed videos throughout the day on the 21stthat guided our traders on possible levels to consider for selling the AUDJPY and also highlighted possible target levels.
So now all we needed next was the trigger, in other words, the sentiment shift that we identified ahead of time, to actually take place.
So, also in the terminal on the 21stof Jan we had multiple reports coming through the wires of contagion fears regarding the Coronavirus and also had detailed video reports released into the terminal that explained a fresh bout of defensive risk-off flows was entering into the market and also gave a detailed video on AUDJPY to advise our subscribers of the potential downside in the pair.
We marked out two potential areas that we could have sold the AUDJPY pair from and also marked out two potential zones to use as profit targets and areas to reduce some risk on the trade.
The pair reached that first resistance area and after rejecting from it kept falling all the way to the first target, now at this time there was still a lot of negative speculative news flow hitting the wires which kept the risk tone negative so you could even have waited for a second pullback to the first target area and re-entered the trade to ride any potential further moves to the downside.
The first wave down would have banked you 30 pips and if you decided to target the second area you could have banked 50 pips on this move to the downside and if you held this move into the next session you could have made close to a 100 pips as the fears of the virus kept risk assets pressured for the next couple of sessions.
So, 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 and please post your questions or comments below because we read them all and actually base our future videos on what you ask for.