Wow Massive Forex Swings

Mario Draghi

By now, you probably already know that the ECB cut their interest rates from 0.15% to 0.05%

Two weeks ago, Draghi signaled that he was ready to act again, and yet, no one expected the ECB to act so quickly…

But here we are, they reduced their interest rates by 10 basis points to spur economic growth and reduce the risk of deflation…

Was it a good measure?

Only time will tell… but if you want to hear my opinion, Draghi knows his stuff, so its probably the way to go.

Now, did you see the impact in the market?

We saw massive forex swings on most currency pairs and crosses!

Did you get advantage of them?

Market reaction to the ECB interest rate cut

Last tuesday I talked about the sentiment (market condition) of a few of the currency pairs that I was watching…

  • AUDJPY – was Bullish
  • NZDCAD – was Bearish
  • GBPCAD – was Bearish
  • EURUSD – was Bearish
  • GBPUSD – was Bearish
  • AUDNZD – was Bullish
  • NZDUSD – was Bearish

And what was the reaction on all of them, during the ECB rate cut:

  • AUDJPY – moved up
  • NZDCAD – moved down
  • GBPCAD – moved down
  • EURUSD – moved down
  • GBPUSD – moved down
  • AUDNZD – moved up
  • NZDUSD – moved down

What’s the conclusion here?

That most of the time, the market moves in the direction of the sentiment of the market (market condition). And as I said on my previous article, the market takes these fundamentals as an excuse to move in the direction of the market condition…

And that’s exactly what happened.

It will always pay to trade in the direction of the market condition! Always!

Your turn

Did you trade during the ECB interest rate cut? or did you have anything opened?

What are your thoughts about trading in the direction and against the market condition?

Share your thoughts!

Tags: , ,


Raul Lopez

I've been trading the markets for more than 15 years. I believe the best way to trade is by adapting to the market conditions. You can learn it too, join our community .

  • Varahala Babu Chelluru

    hi raul…

    can you suggest me the website you use for looking forex economic calender. so that i will follow the same website. not for news trading . just to not to trade in the time of news

    • Raul Lopez

      Hello Varahala,

      I use forexfactory.com

      Cheers,

      • Varahala Babu Chelluru

        hello raul…thanks

        what are the most volatile and important news to be carefull . i`m thinking interest rates, gdp, employment indicators for all major 8 curriencies economies…if their are any volatile news to be careful to avoid trading can you share your ideas…so i follow them

        • Raul Lopez

          I’ve written about the fundamental announcements that I consider to be the most important ones… please go back a few pages to look for that article…

          • Varahala Babu Chelluru

            thankyou

          • Raul Lopez

            No problem…

  • pduarte

    Hello Raul,

    We are about 20 min. to NFP. I still have most of my positions open. Now it’s time to review the SL levels and wait. What do you think?

    • Raul Lopez

      I apologize for the late responsa Paulo!

      What did you end up doing?

      The market didnt react too much to the NFP…

      Have a great weekend!

      • pduarte

        Hello Raul,

        I did have my positions open during the NFP but because they were against me in the end of the day I have closed them because we have the weekend and they could go further against me in the opening of the week.

        Now some of them are prety much on the same position others are against and others are in favor. I am going to wait a little bit more before I open new positions.

        What do you think about what I have done?

  • Varahala Babu Chelluru

    hi raul…

    thanks for intimating ecb interest rate in the previous article…i have opened 4 standard lots in eur/usd sell trade when immediately figure came out the trade hit profit. actually i never trade the news …but the thing is market condition is supporting news announcement…thanks

    • Raul Lopez

      Yep, most of the time the market uses the fundamental announcements as an excuse to move in the direction of the market condition…

      Still, I wouldnt recommend you to trade the news announcements… sometimes the market behaves in weird ways…

      Have a great weekend!

  • Chad Hogan

    Hey Raul,

    What a night we’ve had. I had a couple of trades on and wasnt sure whether to close them or not. Was far enough out in front to leave them on though. Glad I didnt! Took a heap of pips on GBPUSD and USDCHF but I closed my order on AUDCHF, wish I didnt! Anyway how did you do?

    • Raul Lopez

      I had a few trades open Chad, and all of them moved in the intended direction, so, I did very well last week!

      Still you did very good with the GBPUSD and USDCHF… dont worry about what happened to the AUDCHF…

      Enjoy your weekend and say hello to Tania!

  • I dipped out, Raul. As I knew I wouldn’t have much time to do anything I stayed away. Now a good idea to get in again on trends?

    • Raul Lopez

      That probably a good decision because you need to monitor the market if you have open trades… specially with fundamentals like the ones we got this week…

      On some of them, on others it is too close to the next LT level…

      Good luck Andy!

      Raul

      • Thank you, Raul. Always good advice.
        Cheers.

        • Raul Lopez

          No problem Andy!

  • pduarte

    Hello Raul,

    Thanks a lot for your knowledge.

    I have open trades in the following currency pairs:

    EURUSD
    GBPCAD
    AUDCHF
    AUDJPY
    EURAUD
    EURCAD
    NZDCAD
    GBPUSD
    CADJPY
    NZDUSD
    GBPAUD
    ZS.X4

    Some of them, I have already had to the position once
    And guess what?

    THEY ARE ALL POSITIVE.

    So my friend thanks again.

    Cheers,

    Paulo

    • Raul Lopez

      Wow Paulo!

      You are definitely doing way better than me!!!!

      Congrats my friend!

      Cheers,

      • pduarte

        When the teacher is good…

  • Waqas Khan

    excellent report
    i learned my lesson and next time i will keep this in mind. thanks Raul u are awesome

    • Raul Lopez

      Hello Waqas,

      Dont worry, there will alway be new opportunities…

      We all learn lessons every trading day…

      Cheers,