Trade Example: Trading The EUR/USD On Fiscal Stimulus Hopes

"You had about an hour to digest the positive news and jump in and ride out the rest of the move to the upside. Even if you missed the initial move you could have waited for a 50% pullback."
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We’re going to demonstrate how Forex Source subscribers made money trading a sentiment shift involving EU Fiscal Stimulus Speculation this week… The move we’re going to be looking at is this one here on EURUSD.

So, let’s break this down and see how you could have predicted and caught this move, using our market commentary.

So, firstly we need to understand the context or the baseline surrounding this pair before the move took place…

Now inside the Forex Source Terminal on the 26th of February, we released our video commentary. We saw that the EURUSD pair was catching a bid in the short-term due to aggressive increase in market expectations for FED rate cuts.

Also, in the terminal, inside our market insight section was release an investment bank insight that said there was some possibility of more EUR upside from some short covering on the EUR due to the current market positioning at that time.

Once the baseline was in place the next step is to identify the type of breaking news that would generate the biggest market moving shift…

So in the terminal again to the 26th to the current sentiment drivers report for the EUR which highlighted the importance of fiscal stimulus for the EU and mentioned that any developments suggesting potential fiscal stimulus for the EU would be EUR positive in the short-term.

So now all we needed next was the trigger, in other words, the sentiment shift that we identified ahead of time, to actually take place.

So, also in the terminal, later on the 27th of February we had a news release that hit the wires saying that Germany is considering a possible fiscal stimulus program in case the Coronavirus hits the economy hard. Looking at the chart, we can see that we had an initial move to the upside of about 20 pips, but the pair stalled for about an hour before taking off to the upside. That means you had about an hour to digest the positive news and jump in and ride out the rest of the move to the upside.

At the same time we also saw additional moves to the downside in the Dollar throughout the day as the market was pricing in more and more additional rate cuts by the FED. Thus, even if you missed the initial move you could have waited for a 50% pullback and then engage the pair to the upside and take off your position at the new fair value area at the 1.005

So, if you’re interested in learning more about how our market commentary can help you interpret news and fundamental analysis into profitable trades like this, click the link below and check out Forex Source.

Thank you and please post your questions or comments below this video because we read them all and actually base our future videos on what you ask for.

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