Market dynamic of GBP: How does this stuff really work?

[smst]

Hello

I underst that forex is a decentralized interbank market but sometimes things happen that just leave me scratching my head wondering how this stuff really works.

Here are a couple of examples:

- This morning around 4:30 EST the Pound did a u-turn retraced almost 50 pips in one five-minute bar. I'm used to the little fakey breakout moves it does in the early morning common retracements of 20-30 pips but in recent weeks there's a pattern where it retraces with a vengeance then swings rapidly back forth at seemingly quiet times. It could reflect indecision in the market but the moves seem too intense for that. Is it manipulation by bigger players? If so how is this accomplished with such ease in what's described as a very liquid market? Is volume lighter during the summer months thus making this more feasible?

- On the release of the CPI report at 8:30 a.m. EST the rate for cable instantly gapped downward 1.8277 to 1.8237 then slowly retraced in a sweeping motion. What caused the gap? If the report was dollar-bullish the rate should have continued downward but the market seemingly rejected it. Typically there is volatility after the release of reports but this wasn't the pendulum-like price swing that usually occurs with a stepped progression Point A to Point B. What was the origin of this rate?

These moves aren't simply spikes my own broker because they're mirrored on other platforms.

My hope is for some good discussion here on this topic not to start another blame-fest. My goal isn't to blame but rather to underst the currents of the waters I'm swimming in.

Can anyone who really knows the answers-- isn't just speculating like me--explain the dynamics of this market?

[graemenash]

The drop at 4.30 EST was caused by the release of the BoE minutes.

[smst]

graemenash

You're right--that's an oversight on my part. It was on my event calendar but somehow I overlooked it. There have been other occasions in recent weeks though where the sort of movement I described occurred without corresponding announcements or reports in the UK/Eurozone (which may be why I was hasty in giving this morning's move the same label).

What I'd like to learn is exactly what the chain of events is--or could be--that causes such movement. If I had worked in the industry I might have had a view the inside but I haven't so I'm hoping others who have can explain.

Originally Posted by graemenash

The drop at 4.30 EST was caused by the release of the BoE minutes.

[xtsunami]

Could be that the dance in the heavenly realm which started four hours earlier was completed at the appointed time within one pip of the appointed price at 1.8291.

For those who underst it was an easy trade.

[bikash]

Originally Posted by smst

Hello

I underst that forex is a decentralized interbank market but sometimes things happen that just leave me scratching my head wondering how this stuff really works.

Here are a couple of examples:

- This morning around 4:30 EST the Pound did a u-turn retraced almost 50 pips in one five-minute bar. I'm used to the little fakey breakout moves it does in the early morning common retracements of 20-30 pips but in recent weeks there's a pattern where it retraces with a vengeance then swings rapidly back forth at seemingly quiet times. It could reflect indecision in the market but the moves seem too intense for that. Is it manipulation by bigger players? If so how is this accomplished with such ease in what's described as a very liquid market? Is volume lighter during the summer months thus making this more feasible?

- On the release of the CPI report at 8:30 a.m. EST the rate for cable instantly gapped downward 1.8277 to 1.8237 then slowly retraced in a sweeping motion. What caused the gap? If the report was dollar-bullish the rate should have continued downward but the market seemingly rejected it. Typically there is volatility after the release of reports but this wasn't the pendulum-like price swing that usually occurs with a stepped progression Point A to Point B. What was the origin of this rate?

These moves aren't simply spikes my own broker because they're mirrored on other platforms.

My hope is for some good discussion here on this topic not to start another blame-fest. My goal isn't to blame but rather to underst the currents of the waters I'm swimming in.

Can anyone who really knows the answers-- isn't just speculating like me--explain the dynamics of this market?

Hello there
Don't know if i can help you much but i used to think the same when i was quite new to the market though i don't know how long you have been into this. i used to wonder about the lull volatility in this market how a news breakout could prove a bullish note on one occasion bearish on the next. that was untill i started learning technicals. i don't say that you will start making money but i do know it will guide you help you in sensing when to be in the market when to you know just observe. bikash