The reason why market makers are always one move ahead of us.

30 Haz 2019

The rate cut always has an adverse effect on currencies strength. On May 07, the market was predicting a 0.25% rate cut from Reserve Bank of Australia. But the bank was not easy to cut its interest rate, but due to its tone of cutting it by next month price might fall. The dovish statement started a strong downtrend of 200+ pips. It consolidates over ten days after that. However, as I showed in the blue box, we can see strong price movement in a very short time. Few news events were between them, but I do not think it was strong enough for the sharp drop. Then, on June 04, the reserve bank of Australia has cut its rate, interestingly the price was going up. Later the big drop happened. I believe market makers or the "big boys" are moving ahead of the news event, also the news is not new for them actually. This sum up why trading on the news is so risky!

PS: I know that showing only against Japanese yen is not suitable, but I guarantee that almost every pair with the australian dollar has a similar look.