More on How to Trade the News with a Directional Bias.

Continuing yesterday’s discussion, since you have a bearish outlook on the dollar (your directional bias), you would pay particular attention to the lower breakout point of that range.

You are expecting the dollar to drop, so a reasonable strategy would be to set an entry point a few pips below that level.

You could then set a stop just at the upper breakout point and set your limit for the same amount of pips as the breakout point range.

One of two things could happen at this point.

1. If the unemployment rate drops then the dollar could rise. This would cause USD/JPY to rise and your trade would most likely not trigger. No harm no foul!
2. Or if the news is as you expected and the unemployment rate rises, the dollar could drop (assuming the entire fundamental outlook on the dollar is already bearish).

This is good for you because you already set up a trade that was bearish on the dollar and now all you have to do is watch your trade unfold.

Later on, you see that your target gets hit. You just grabbed yourself a handful of pips! Booyah!

The key to having a directional bias is that you must truly understand the concepts behind the news report that you plan to trade.

If you don’t understand what effect it can have on particular currencies, then you might get caught up in some bad setups.

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