I’m about to declare our first tool of finding sentiment in the market and it is “Magazine Covers”
As you know, magazines such as The Economist, BusinessWeek, Forbes, Wall street Journal, New York Times are very popular and most of professional traders say that these are must-reads.
Did you get the point? Professionals recommend these magazines and they read them for sure, so for now we know that there is something that almost every trader watches.
But how can we use it in our Forex journey? I’m going to show you some examples of this indicator and then we are going to have a conclusion on this part.
The disappearing Dollar 4th Dec 2004, The falling Dollar 2nd Dec 2006:
3rd of December 2004 after 8 months rally exactly when EURUSD was closed at 1.3458, The Economist published its weekly magazine with this headline in the cover page: “The disappearing dollar”
Exactly after this news when market opened on Sunday afternoon, the pair dropped near 300pips and then it formed a top at 1.3669 and dropped for a year and reached 1.1640.
2nd of December 2006 we have another example; the pair closed at 1.3335 a day before and The Economist published its weekly magazine with another currency-related cover page:”The falling dollar”
exactly on 5th December this pair started to drop near 500pips.
These are the pictures of that cover pages:
We have many examples of this indicator but as I want to keep articles short, I’m going to show you a few examples that occurred recently.
Can anything perk up Europe? 10th July 2010:
Exactly at that time EURUSD was traded around 1.2600 and after that time rallied for about 800pips and then formed a bottom near 1.2624 and now it’s near 1.4000.
This is the picture of that cover page:
As a conclusion I can say that: These popular magazines will never allocate their cover pages to the currency market until there is a difficult situation for people and so these news have got great impacts among market movers and the market, so make sure that you are going to watch carefully these cover pages every week and catch great signals just after watching a picture!
Winner’s Edge Trading, as seen on: