September 2, 2015Uncategorized

9/2 Analysis: Profiting After a News Release

Today, I want to show you how to trade on days where there is a high impact news released scheduled.

We are looking at the NY session and immediately after the news is released you can see the jumbled mess on our indicator including the EUR (pink line) and the NZD (purple line) with huge whipsaws.

You do NOT want to trade during (or right before/after) these events.

If we wait about 26 minutes after the open, the market settles down and we get this pattern on our indicator:

The NZD (purple line) and AUD (orange line) are spiking up which indicates momentum in the market. The CHF (turquoise line) is weak and getting weaker. NOTE: The NZD or AUD against the CHF isn’t a great pair but that is something I teach in my advanced course. The AUD/CHF is a pair I’d trade so let’s go with:

  • AUD/CHF BUY

If you would have entered at the close of the price bar that corresponded to what we saw on our indicator, price went up 33 pips from that point.

You can watch the full video analysis here:

 

[00:00 – 05:16]

 

 

[slide]              black bkgd w/legend top left, 8 colorful horizontal lines

Hello; I’m James Edward, of CompleteCurrencyTrader.com, and welcome to another Currency Strength Analysis. And, today, we’re looking at the New York Market Open.

Now, today, at the New York Market Open (or 15 minutes after the open), there was a high-impact news release scheduled for the U.S. dollar. So, that is a high-impact piece of news and you shouldn’t be trading around that. And, what I recommend when that high-impact news is happening close to the Open is, you either don’t trade at all and you take that particular session off, or if there is no further news scheduled after first release, then you could wait until that release has settled down. Now, again, I really recommend you wait for at least ten minutes for the market to settle down.

So that’s what we would do today, and I’ll show you how the market developed after that. [arrow indicator] This is what the indicator looked like, immediately, at the Open and we’re not taking interest because we’re not going to trade the break-out immediately at the Open; we’ll trade the break-out at after that news has settled down.

So, [scrolls right on same graph] fast forward it 15 minutes. [arrow indicator] This spike in price [arrow indicator] that has mostly affected the New Zealand dollar and the Euro (here) is that U.S. dollar news. And you can see how the news on one currency can actually impact the rest of the market and you can almost see how volatile that is: the price spiked up and then, immediately, whips back down again; and, the opposite is quite true for the Euro, which is precisely why I do not trade around news, because that volatility would whip [inaudible word 1:42] of the market and create unnecessary losses.

But, after that, if [scrolls further right, same graph] we fast forward again (and you can see at this point, it’s 26 minutes after the Open), the market does, then, begin to move much more in unison than what we would expect to see at the Market Open. (So, what we’ve effectively seen here with that unusually happening so soon after that break-out or the way the market gets started is delayed until after that news has hit.)

And, what we have here is the Swiss franc moving down into weakness and the New Zealand dollar and the Australian dollar are now spiking up. (These two currencies are almost vertical.) So they are “good” buy currencies. The Swiss franc, matched against both of these is not ideal–(But that’s a more advanced lesson where you get to understand the characters of different currencies and the characteristics of different peers, and I’m not going to go into that on this blog video. That is something I cover in the advanced course.) However, just for the sake of argument, if you had entered these [arrow indicating] two currencies against this one Swiss franc (which are not particularly good areas to trade), they still would’ve been quite a good trade, all of them–

 

 

[slide]              B&W AUDCHF.MS line graph

[continues] … to the AUD Swiss franc. (I do trade this pair. This is not too bad.) This price bar (here) [horizontal / vertical center arrowed line] is the price bar where we correspond with this move [flips to black bkgd left end] here that we’re looking at on the indicator. [returns to AUDCHF graph]

                        So, you could’ve entered, at the worst case scenario at the close of this, and, (if I could just measure that distance) [diagonal line from center graph to highest pt right] you can see that, from there, up to the highest point, that price has actually gone 33 pips. So, if you’d have entered with a market order when you saw that momentum start to kick in, that would’ve been a profitable trade.

 

 

[slide]              B&W vertical line graph (NZDCH.MS)

If I bring in the N-Zed-D against the Swiss franc, this is a much less-favorable currency pay that I don’t trade very often, unless the momentum is extreme. [arrow indicates] This is the price bar that indicates on the indicator and this one, [measures center coord diagonally upward to highest right bar] from the close of that price bar, has gone up 26 pips. But, what you have to remember (here) is that the spread is very, very wide on this pair, so you wouldn’t necessarily have hit profit by yet. Trade would still be open and it could still close at a loss.

 

 

[slide]              black bkgd w/8 colorful horizontal lines, scrolled even further right

However, if I go back over to the dashboard or the indicator and fast forward just a couple of more minutes, this is 33 minutes after the market is open. (So that’s 17, 18 minutes after the news has hit.) Now, we have a much better signal, and you can see the Canadian dollar’s moving up to strength very, very nicely and the Euro’s moving down far more steeply. (Look at the steepness of that line [over here] on the right-hand side, compared to the angle of the Swiss franc.)

That steepness always indicates much greater momentum and it is momentum that gives you the high probability trades. So this is a much more favorable condition to be trading in.

If I go–

 

 

[slide]              B&W NZDCHF.MS bar graph

[continues] … over to the map price chart (and [pulls in EUROCAD.MS] bring the EuroCad in) and this is the price bar that corresponds with that move on the indicator, and, again, let’s go for a worst case scenario and say you got in late and entered at the close of this five-minute price bar, the price has, in fact, trended immediately down 64 pips without any kind of return investment, so you would’ve easily captured your 20-pip break-out trade on your map.

 

 

[slide]              black bkgd w/8 colorful horizontal lines, scrolled even further right

And what that really showed was that momentum. You can see how much better this pattern is on the indicator and how that resulted in a much-better move [flips to EUROCAD.MS] on the actual price charts, as well.

So that’s a lesson to (really) pay attention to–[back to black bkgd indicator line graph] is the steepness of the lines and the momentum that you really should be looking for to give you your highest probability trade entries.

 

 

 

[end]

 

(5:16)

You can see that our Currency Strength Indicator is an effective tool for picking out the highest probability, lowest risk trade set ups while avoiding market conditions that aren’t favorable. If you keep using this tool every day along with our daily Forex analysis, you will increase your win rate and be on your way to becoming a profitable trader long term.

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James Edward
James Edward has been a successful Forex hedge fund manager & educator for over a decade. He founded Complete Currency Trader, a London based firm that has consistently trained individuals to become professional and profitable traders long term using the individual currency strength analysis methodology. CCT is an elite Forex educational firm and has a reputation second to none with over 90 positive reviews and an overall 4.538 out of 5 rating on the third party verification site Forex Peace Army. James’s affable personality, expert knowledge, notoriety for getting results, and steadfast dedication to his clients, has secured his position as one of the most trustworthy, liked, and in demand authorities in the industry.