There’s no one “All in” or “Bet the Farm” formula for success when it comes to predicting how the market will react to data reports or market events or even why it reacts the way it does.
You can draw on the fact that there’s usually an initial response, which is usually short-lived, but full of action.
Later on, comes the second reaction, where forex traders have had some time to reflect on the implications of the news or report on the current market.
It’s at this point when the market decides if the news release went along with or against the existing expectations and if it reacted accordingly.
Was the outcome of the report expected or not?
And what does the initial response of the market tell us about the bigger picture?
Answering those questions gives us a place to start interpreting the ensuing price action.
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