What comes first...

[wasp]

The news or the price action...?

Today on cable for example we have had little news until this evening.

Looking at the chart I see a flag and drop and now looking through the news, there is talk of the pound losing strength due to the 7 junior ministers leaving and/or positioning ready for the beige book.

Both approaches (News/TA) would have worked if correctly anticipated. Obviously cable is not alone in this and it happens in all markets so...

Would something have happened to cause the drop regardless because the pattern was already there or would the pattern not have appeared without the news?

 

[dbphoenix]

Price moves because traders are trading. And sometimes it creates what the trader sees as a pattern. But price doesn't have feelings or think.

Therefore, it's likely that those who were part of what became "news" acted yesterday on what they knew, thus causing the initial drop. Those who waited for the release acted later, as did those who acted on the drop.

 

[crazy trader]

Don't know but that is an excellent question. My thought on the chart you showed is similar to the previous poster. The initial drop was due to some type of trader knowledge. This small drop was then cascaded when the news picked up the message causing the secondary fall-off of the chart.

 

[dc2000]

IMO price action comes first news is just an excuse for the turn the only occasion where this differs is where there is surprise news that is not priced in then you will find the market always gives a second chance and hence the cable move this week

 

[Splitlink]

Don't know but that is an excellent question. My thought on the chart you showed is similar to the previous poster. The initial drop was due to some type of trader knowledge. This small drop was then cascaded when the news picked up the message causing the secondary fall-off of the chart.

I don't know whether the drop was due to something known or, simply, not wanting to be in the market until the news clarified but, I'm sure that the chart cannot forecast what is going to happen anymore than the trader who bought at the very bottom knew that it was going to bounce upwards. As always, come to a decision and watch your back(----stops).

Split