Our clients know that our mantra is “A prepared trader is a profitable trader”, that said our clients witnessed firsthand after joining our “Make Me a Trader Course” how to take advantage of news events to their favor and profit from it.
Last Thursday, January 25th, 2018 European Central Bank’s Decision left interest rates unchanged, the market reacted with further rally to the EURO vs. the USD to new highs of the year. This initial move is usually too quick and fierce to catch for most traders however, the reactionary move, otherwise known as the fade presents an experienced trader with a big opportunity to profit from.
The initial move of the EURUSD caused the EURO to rally from 1.24125 to 1.2518ish level which is a move of more than 100 pips, this move as mentioned was too quick to catch. However, once the dust settled and the market was digesting the news the EUR attempted another go to break above the 1.2518 and failed, which could be seen as a double top.
At this point, we call this the beginning of the fade of which the strategy is to short the pair to trade the reactionary move on the downside. As can be seen on the graph above the reactionary move gives more than ample time to enter the trade and profit from. The reversal in this case, brought us back to the 1.2412ish level, down 100 pips!!
At the end of the week, we were pretty much unchanged from before the ECB decision but, as in between we had a great opportunity!!!
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