Related Topics
Currencies

"The news spooked the market." (NOT.)

There is an “early warning system” for sudden trend changes.

by Vadim Pokhlebkin
Updated: September 06, 2018

The phrase in the headline? You hear it all the time. Especially if the news was "unexpected" or "unscheduled," and a sharp move in the market followed.

But what if you were to learn that usually, the market's "reaction" is merely a coincidence?

Our story begins on September 5, when the British pound experienced its "...biggest 1-hour jump of 2018 on Euro, Dollar."

Yes, there had been an unexpected news item:

"The Pound surged around 1.5cGBP/USDin 15 minutes on the latest Germany/UK Brexit murmurings..." (Pound Sterling).

So, a Brexit rumor surfaced, and the market reacted. A caused B. The question is, though, why was the reaction so jumpy?

Clearly, forex traders were in a "jumpy" mood. Clearly, they were on the edge of their seats, looking for any excuse to buy cable. Why? Allow us to offer an unconventional answer.

Early in the morning U.S. time on September 5, our Currency Pro Service was tracking a 5-wave decline on an intraday GBPUSD chart (full labeling reserved for subscribers):

fofo 09-06-2018-1

You can see that wave patterns showed GBPUSD ending the 5th (and final) wave of a 5-wave decline. If you know your Elliott, you know that after a 5th wave is finished, the market reverses in a correction.

So, the expectation was for GBPUSD to start rallying soon.

Only then came the news of "Brexit murmurings." GBPUSD spiked higher:

fofo 09-06-2018-2

But here's the kicker.

Elliott wave patterns had suggested -- ahead of time, once again -- that any rally would be corrective, so we knew not to get married to it. As our Currency Pro Service editor, Jim Martens, put it,

"Notice a (b) over the surge.The move down from the high was the start of (c). If nothing else, we didn't get caught up in the rally attempt."

The GBPUSD rally indeed fizzled out fast:

fofo 09-06-2018-3

What makes forecasts like these possible? Elliott waves help you track and forecast the mood of the market participants -- like forex traders' "jumpy mood" on September 5.

Sure, the news may serve as a catalyst. But market psychology will always go where it wants to go, regardless.

You Can Have a Team of Top, Elliott-Based FX Analysts Working FOR YOU

-- Around the Clock --

They will:

Scour the Most Popular Forex Pairs

Orient You to What's Coming Up

And Look the World Over for the Most Promising Elliott Wave Set-Ups

Before They Are On Anyone Else's Radar

Preparing You to Pounce on Opportunities and Ride Trends

Trading the forex markets is hard. Constantly surveying the world's currencies for pending moves around the clock is not easy. And even when you do spot what looks to be a perfect setup, staying unemotional becomes an internal battle for most traders.

But there is one way to help tip the odds in your favor. Hire an objective, experienced team of Forex analysts to go to work for you.

4 ways EWI's Forex Pro Service lets you trade with more confidence

If it's an important pair, you'll be on top of it

1. You Get Around the Clock Analysis for 11 Popular FX Pairs

Your Currency Pro Service subscription puts a team of Forex experts in your corner. Their goal is to make sure that day-by-day, hour-by-hour, you have the very latest Elliott wave forecasts for the FX markets that matter most -- whether you need it at 2am or 2pm. This intensive coverage includes 11 of the most popular dollar and cross rates:

Dollar rates: EURUSD, USDJPY, GBPUSD, USDCHF, AUDUSD, USDCAD
Cross rates: EURGBP, EURCHF, EURJPY, GBPJPY, AUDJPY

2. You Get "Opportunity-Now!" Alerts

Your Pro Services Forex team scours the FX markets for dramatic set ups for you. Each is a market that has reached a low-risk, high-reward juncture in its wave pattern. You'll find them in the Opportunities section of your Pro Service portal.

3. You Get Essential Weekly Perspective

Once a week, your Forex analysts record a video to help you prepare for the week ahead. Sit back and watch as our analysts reveal the markets that are on their radar and that should be on yours. Then, each week market veteran Murray Gunn posts his Currency Insights column calling your attention to an over-looked but powerful wave-generated undercurrent moving the money markets. These videos and columns add up to unparalleled, essential perspective for all serious FX traders.

4. You Become Part of an Exclusive Community of Savvy Elliott Wave Traders

Our Forex team is your Forex team. If you have a question about the Wave Principle or our analysis, just send us an email. We'll update the next post or video so you and your fellow subscribers get the clarity you need.

Or, if you're having a hard time grasping an Elliott wave concept, often we can suggest a resource for you to read or watch.

We know we're successful when you understand the Wave Principle and our analysis. We'll do what we can to make sure that happens.

Note that we do not provide individualized services, assistance or advice concerning investing or trading in any way.

Start Your Subscription Now

Personlize your FX Pro Service package to get the coverage you need. You pay only for the markets and timeframes you order, and the more you select, the less you pay for each one. Try our selection tool to see how it works.

Select My Markets Now