The new way was purposefully instituted to contain and fully control currency prices to small daily ranges as currency prices pre 2016 traded 2 and 300 pips days. This was to much movement for the central bank’s currencies as written by their own words.
Once the new procedures were implemented by the ECB, all central banks followed. Today’s result is we have moves but no movement and news releases with moves but no movement.
Pre 2016 news announcements traded to the required pip movement and news releases not in conformity to expected results also traded far and wide to the requesite pip movements. Pre 2016, traders actually earned many pips by trading only news announcements and this manner to trade cut down on screen time and market watching. Traders earned daily pips in seconds and minutes then walked away for the day.
Central banks today inform their economies are great and wonderful or not so good yet the value of their words are worth 20 pips, maybe 30 if the price was located in the right location at the time of the announcement. Pre 2016, words to a good or tanking economy would’ve sent currency prices flying 2 and 300 pips easily.
Yields, yield curves and yield spreads were once profitable trade strategies but yield curves changed radically since 2016 by its severe limitations and trade strategies required deep adjustments yet adjustments no longer employed. Yields today are so far away from a market price, its not worth the effort for trade consideration. The further yields travel along the yield curve then the farther exist reality to a true market price for trade and prediction.
For long term trades and if a trader truly understands what they are doing then a yield trade remains viable and most profitable.
The structure of markets remain the same and can’t ever change yet what changed is the range and speed to market prices. Instead of 50 and 70 pip moves for news releases, we have 20. Rather than 200 pip days, we have 100 pip weeks. A deep adjustment was required in 2016 to trade strategies and target trading. Without adjustment, traders existed under an old system that no longer exists and may never be seen again.
New market rules and trading procedures can only be accomplished by the ECB as the leading activist central bank on the planet. The recommended read is President Hoover’s memoirs to understand the deep deals and trading arrangements central banks strike among themselves. Central banks know the exact methods for higher and lower inflation dating to the 1920’s but today they sell us on this multi year effort for 2% that never materializes.
GBP/USD Day Trade
1.3912, 1.3919, 1.3929, 1.3938, 1.3941, 1.3947, 1.3956, 1.3962, 1.3972, 1.3977.
Vs 1.3991, 1.4001, 1.4009, 1.4018, 1.4027, 1.4036, 1.4045 and 1.4054.
Most vital: 1.3919 and 1.3941 vs 1.4018 and 1.4054.
Today’ s currency prices are trading on odd numbers rather than perfect even numbers. What for example is 37 or 18.5. Is 37, 36 or 38 or 37. This is the imperfect situation to all currency prices today based on the odd number system currently in operation.