Why does price make a pullback after a break? | Page 5 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

How much do you want to make and why do you want to make it 17 replies

How and Why Does Price Move? Who and What Moves Price? 35 replies

If you make money, does Oanda make money? 35 replies

Why this support resistance fractal indicator does not break? 0 replies

help! why this simple break-out EA does not work? 4 replies

Attachments: Why does price make a pullback after a break?
Exit Attachments

Why does price make a pullback after a break?

  • #81
  • Feb 10, 2014 4:03pm Feb 10, 2014 4:03pm
Quoting Jason Rogers
{quote} News events have the potential to instantly change the views of market participants about the price at which a particular currency pair should be trading. For example, take a look at the chart below which shows the market reaction to the Nonfarm Payrolls report on March 8, 2013. {image} GBP/USD dropped from 1.50361 to 1.49972 in one tick. Yes one tick! That means there were no prices quoted by the liquidity providers in between those prices. That's because they didn't want to take the risk of placing a bid in the market at a higher price....
Exactly.for some reason most dont see that it is lack of liquidity during and just after news.
  • #82
  • Last Post: Feb 10, 2014 6:46pm Feb 10, 2014 6:46pm
Quoting Jason Rogers
{quote} News events have the potential to instantly change the views of market .
Thank you for a reasonable reply.

About once a month for the last X # of years I've received a (broker) message, usually before
FOMC or NFP. In part, it reads as follows;

"Risk with News Trading

As with all major economic releases, there could be significant price volatility with this announcement. Currency spreads will typically widen just before the release and will remain wide for a few minutes after. If the announcement is a shock to the consensus estimate, the price of the currency pair could gap significantly. For example, the price on the EURUSD trading at 1.2820 - 1.2822 just before release could gap up 60 pips to 1.2880 - 1.2882, without any available prices available between the price of 1.2820 and 1.2882. A Buy Stop placed before the announcement at 1.2830 would turn into a Market Order and would be filled at the prevailing price 1.2882. The same would be true with a Sell Stop.

Approximately four years ago we saw a gap of approximately 200 pips on the GBPUSD on a Non-Farm Payroll announcement. While this is an extreme example, it nevertheless is a possibility with trading during economic announcements. Consequently, plan on the spreads widening and, if you are trading with a Buy or a Sell Stop entry order, do not anticipate being filled at your entry price. You will be filled at the prevailing market price after the release, which could be significantly different from your desired price of your entry order.

Please be advised that due to the volatility of price fluctuations during the news, it is possible to see a delay in execution due to the additional verification necessary for each trade. "

So at the very least, there are a few traders on the same page now.

Kind Regards
When the Joker is in the deck.. fear not and play it well
0 traders viewing now