FOREX THEORY
Market Expectations to News and Their Impact on Currencies
There’s no one “All in” or “Bet the Farm” formula for
success when it comes to predicting how the market will react to data reports
or market events or even why it reacts the way it does.
You can draw on the fact that there’s usually an initial
response, which is usually short-lived, but full of action.
Later on comes the second reaction, where forex traders have
had some time to reflect on the implications of the news or report on the
current market.
It’s at this point when the market decides if the news
release went along with or against the existing expectation, and if it reacted
accordingly.
Was the outcome of the report expected or not? And what does
the initial response of the market tell us about the bigger picture?
Answering those questions gives us place to start
interpreting the ensuing price action.
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