With the Fed’s interest rate decision out, we focus on ECB’s decision later today. The bank is expected to remain on hold with the market expecting a rate hike in December. High inflationary pressures in the Euro Zone indicate the necessity of further monetary policy tightening while low growth in the Zone tends to suggest caution in hiking rates. Should the bank remain on hold as expected and accompany its decision with a hawkish forward guidance, we may see the EUR getting some support.  

BoJ to keep rates unchanged 

In tomorrow’s Asian session, we highlight from Japan the release of BoJ’s interest rate decision. The bank is widely expected to keep rates unchanged yet is also marginally expected to proceed with a rate hike in December. Should the bank remain on hold as expected and accompany its decision with a possibly hawkish forward guidance, we may see JPY getting some support. 

Alphabet disappoints, Amazon, Intel are next

Microsoft’s earnings report seemed to go well, yet Alphabet’s report disappointed traders some even at both the revenue and the EPS figure as well as the negative cash flow for a second quarter in a row. Today we highlight the release of Amazon’s and Intel’s earnings reports in the aftermarket hours. Better-than-expected figures, possibly accompanied by robust forward guidance, could lift market sentiment.   

Oil prices show signs of stabilisation

Oil prices seem to display some signs of a relative stabilisation. On a fundamental level, we note hopes for a diplomatic breakthrough in the US-Iran conflict intensified after US Vice President Vance sent a letter to Iranian officials, thus weighing on oil prices. Yet the Houthi attacks are still ongoing and the situation in the Gulf region is still tense, pushing oil prices higher. We view the stabilisation of oil prices as temporary and prevailing fundamentals may dictate the direction of oil prices. 

Other highlights for today

In today’s American session, we get from the US, the PCE rates for September, and the preliminary GDP advance rate for Q3 and the ECB’s interest rate decision. In tomorrow’s Asian session, we get Japan’s October Tokyo CPI rates, September’s preliminary industrial output and Australia’s Q3 PPI rates. In tomorrow’s European session, we get Euro Zone’s preliminary GDP rates for Q3, France’s and Germany’s October HICP rates, Switzerland’s October KOF indicator and the Czech preliminary GDP rate for Q3. 

Charts to keep an eye out

EUR/USD Daily Chart

EUR/USD bounced on the 1.1115 (S1) support line yesterday and remained there. We note the stabilisation of the pair’s price action, yet the low level of the RSI indicator tends to show a bearishly predisposed market for EUR/USD. Also the continuation of the downward direction of the 20 moving average signals the continuance of a possible bearish direction. Should the bears regain control over EUR/USD could break the 1.1115 (S1) support line and start aiming for the 1.0.955 (S2) support level. Should the bulls take the lead, EUR/USD may aim if not breach the 1.1260 (R1) resistance line.

WTI Daily Chart

WTI’s price action, remained near the 101.00 (R1) resistance line. Given that the upward trendline guiding the commodity’s price seems to be broken, we switch our  bullish outlook in favour of a sideways motion bias. Yet the RSI indicator remains above 50 implying a bullish market predisposition, hence we issue a warning for any possible bullish market tendencies. Should the bulls regain control, we may see WTI’s price action breaking the 101.00 (R1) resistance line clearly and start aiming for the 108.85 (R2) resistance level. Should the bears take over, we may see WTI aiming for the 94.30 (S1) support line.

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What Is a Profit Warning?

A profit warning tells investors that a company expects lower earnings than previously forecast or expected by the market. It is not a rumour or an analyst’s prediction. It comes directly from the company.

Companies usually issue this warning when they expect results to fall below market expectations. This often happens when a gap develops between what investors expect and what the business can realistically deliver. Several factors can cause this, including weaker revenue, rising costs, supply chain problems, or changes in consumer demand.

The word “warning” is important. Management is essentially telling the market that the numbers have changed and investors may need to adjust their expectations and financial models accordingly.

The Difference Between a Profit Warning and a Routine Earnings Miss

These two terms are often confused, but they refer to different things.

An earnings miss happens after the results are released, when a company reports earnings below what analysts were expecting. A profit warning happens before the results are published. The company steps in and tells investors that its performance is likely to fall short of previous expectations.

That difference is important when it comes to timing. This warning gives the market an early signal that expectations need to change. An earnings miss only confirms the disappointment once the results are already out.

Why Do Companies Issue Profit Warnings?

There is also a legal and ethical side to profit warnings. In many markets, companies must disclose information that could significantly affect their share price in a timely manner. Keeping investors in the dark while they continue buying shares based on outdated guidance is generally not acceptable.

Common reasons for an earnings warning include:

• A sudden drop in sales or a wave of order cancellations
• Unexpected increases in costs, such as energy, wages, or raw materials
• Currency movements that reduce overseas earnings when companies convert them back into their home currency.
• Losing a major contract or delaying an important deal beyond the reporting period.

Sometimes the problem comes from inside the company. In other cases, it is driven by the wider economy or changes in the market. Either way, management has decided that the gap between expectations and reality is large enough that it cannot simply wait until the next quarterly results to address it.

The Role of Analyst Estimates

Here’s an important point: a profit warning does not necessarily mean the company will perform poorly in absolute terms. It means the results are likely to be worse than investors were expecting.

Analyst forecasts create a benchmark for the market. For example, if investors expect a company to earn $500 million but it actually earns $480 million, that is an earnings miss. If management warns investors about the shortfall beforehand, traders have time to reassess their positions before the results are released.

This is why managing expectations can be almost as important as the actual numbers. Markets react not just to how a company performs, but to how that performance compares with what investors were expecting.

Why Share Prices Can Fall So Sharply

The initial reaction can be pretty sharp. A company’s share price can fall significantly on the day a profit warning is announced, sometimes within the first few minutes of trading.

There are a few reasons the reaction can be so severe:

• Loss of trust: Investors may feel that management did not have a clear enough picture of the business, which can damage confidence in future guidance.
• Forecast revisions: Analysts and fund managers may need to reassess their forecasts and valuation models, which can lead to downgrades and lower price targets.
• Change in sentiment: Once the warning is out, some investors may sell quickly rather than wait to see how serious the situation becomes.

What happens after that is less predictable. Some stocks recover relatively quickly if investors decide the warning was caused by a temporary or one-off issue. Others can continue falling for weeks if the market believes the problem is deeper and points to longer-term weaknesses in the business.

When a Profit Warning Creates a Trading Opportunity

Not every profit warning signals the start of a major collapse. Traders who take the time to look at the details may sometimes find that the market has overreacted. If the issue was temporary, the initial sell-off may have priced in more damage than the company actually faces.

That said, taking a contrarian position comes with real risk. Those warnings can sometimes come in a series. A company may issue one warning, followed by another, and then another. The first announcement does not always reveal the full extent of the problem.

This is where reliable charting tools and real-time price data can be useful. Being able to monitor price movements around announcements, set alerts, and manage position sizes can help traders make more informed decisions. Even if you get the overall direction right, getting the timing wrong on a volatile stock can still be an expensive mistake.

What to Look for After a Profit Warning

Once a profit warning has been issued, the questions start to change. Instead of simply asking whether the news is bad, investors need to consider how serious the problem is and how long it is likely to last.

A few things are particularly worth looking at:

The explanation: Is an external factor causing the problem and likely to resolve soon, or is something within the business driving it and likely to continue?

• Management credibility: Is this the company’s first warning, or has management had to lower expectations before?

• The wider sector: Are other companies in the same industry facing similar pressures and issuing earnings warnings of their own?

If competitors are dealing with the same challenges, the warning may be more about wider industry conditions than a problem unique to the company. That can make a significant difference when assessing what happens next.

Using a Profit Warning in Your Broader Analysis

A profit warning does not happen in isolation. It is just one signal among many that traders can use to assess what might happen next. Experienced traders often look at trading volume around the announcement, whether short interest had already been increasing, and how the stock had performed compared with other companies in the same sector in the weeks leading up to the warning.

Looking at the company’s fundamentals alongside its price behaviour can give you a much clearer picture than relying on either approach alone. Having access to these different data points in one place can also make it easier to understand what is driving the stock without constantly switching between different sources.

Key Takeaways for Traders and Investors

A profit warning is one of the more significant events you can come across when following an individual stock. It can reset market expectations, move the share price sharply, and force investors to rethink the company’s outlook.

The real challenge is working out whether the warning points to a temporary setback or a deeper problem with the business. That is what separates a considered response from simply reacting to a sudden sell-off. Not every drop following an announcement is justified, but a recovery is not guaranteed either.

Trading around these events also comes with increased risk. When volatility rises after an announcement, pay closer attention to your position size, stop-loss levels, and how much of your portfolio you have exposed to a single stock.

DISCLAIMER: This information is not considered as investment advice or an investment recommendation, but is instead a marketing communication.

The post Profit Warning: What It Means for Share Prices appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.

Market attention today is expected to be on the Fed’s interest rate decision. The bank is widely expected to keep rates unchanged, while Fed Fund Futures imply a market expectations for the Fed to hike rates in the December meeting. Given also the inflationary pressures in the US economy, we expect the bank to remain hawkishly on hold. Such a decision could verify the market’s expectations for the Fed to hike rates in the December meeting thus providing support for the USD and weighing on US equities and gold’s price. Should the bank fail to sound hawkish enough, we may see the markets be taken by surprise, moderating their expectations for a rate hike to come and thus weigh on the USD and lift US equities and gold’s price.

BoC expected to hike rates

Before the Fed’s interest rate decision, we get from Canada, BoC’s interest rate decision. The bank is expected to hike rates by 25 basis points, yet the market expects it to remain on hold afterwards. We expect the bank to raise rates given the inflationary pressures especially on energy products, yet the bank may also prefer to keep its options open about the way ahead. Such a stance could weigh on the Loonie, turning the rate hike to a dovish hike, while a more hawkish approach may lift the CAD. 

UK’s Autumn statement could affect the pound

The GBP seems to be losing ground against the USD and pound traders are expected to focus on UK Chancellor of the Ex Chequers Healey’s Autumn Statement at the UK Parliament. Despite market expectations for taxes being announced that could weigh on the GBP, we also note the UK Government’s pledge to provide some “breathing space” which may support the pound.

US tech sector focuses on earnings reports

For the US tech sector, we highlight today the release of the earnings reports of Alphabet (#GOOG) and Microsoft (#MSFT). Should the actual EPS and revenue figures be higher than expected and accompanied by a robust forward guidance we may see their share prices and the market sentiment in general getting a boost. Yet note that market worries for the expenditure required for AI development tend to weigh. 

Other highlights for today

Today we get the US weekly EIA crude oil inventories figure. Tomorrow, we get from New Zealand, the ANZ Business outlook for October, Sweden’s preliminary GDP rates for Q3, and Eurozone’s business conditions for October.

Charts to keep an eye out

USD/CAD Daily Chart

USD/CAD bounced on the 1.3990 (S1) support line, last Friday, interrupting its downward motion. Given that the downward trendline has been broken we switch our bearish outlook in favour of a sideways motion of the pair. Also the rise of the RSI indicator has risen nearing 50, implying an easing of the bearish market sentiment for the pair. Should the bulls take the lead, USD/CAD may aim if not breach the 1.4125 (R1) resistance line. Should the bears regain control over USD/CAD could break the 1.3990 (S1) support line and start aiming for the 1.3880 (S2) support level.

US 100 Cash Daily Chart

Nasdaq rose teasing the 29735 (S1) resistance line, now temporarily turned to support. Given that the downward trendline was broken yesterday we switch our  bearish outlook to a sideways motion bias of the index. The RSI indicator has risen nearing 50, signalling the evaporation of the bearish market sentiment for the pair. Should the bulls remain in charge, we may see Nasdaq’s price action aiming for the 30770 (R1) resistance line. Should the bears be in the driver’s seat, we may see Nasdaq dropping below the 29735 (S1) support line and start actively aiming if not breaching the 28750 (S2) support base.

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The USD regained the momentum in the FX market given also the weakening of the EUR and the tumbling of BRL, given Lula’s re-election as Brazil’s President.  US financial releases could affect USD’s direction today, yet our attention turns towards New Zealand, given RBNZ’s interest rate decision in tomorrow’s Asian session. The bank is widely expected to hike the cash rate from 2.75% to 3.00%. Yet the bank is expected to continue hiking the rate even in its next meeting and should the bank fail to provide the necessary hawkishness in its forward guidance the rate hike may turn into a dovish hike and the Kiwi may lose ground. 

US equities remain mixed

US equities tended to send mixed signals yesterday, yet market sentiment seems to have turned more risk-on. Anthropic’s IPO filing yesterday boosted market sentiment, regenerating market interest in the tech sector and specifically AI. Yet the market’s worries for the high CapEx necessitated by AI have not been resolved and may once again drag US equities lower.

Oil prices continue to rise

Oil prices corrected lower yesterday as market hopes for an easing of tensions in the Gulf region rose, given the negotiations of Iran with Mecca pact states. Yet renewed attacks by Houthis on Saudi Arabia underscored the tensions in the area and rekindled market worries for the supply side of the international oil market, pushing oil prices higher today. 

Gold’s price remains stable

Gold’s price remained relatively stable yesterday and during today’s Asian session and the rise of the USD in the FX market left it unaffected, highlighting that the negative correlation between the USD and gold’s price remains inactive. Nevertheless a possible rise of oil prices could lift market worries for inflationary pressures in the US economy, thus weighing on gold’s price. We highlight the Fed’s interest rate decision tomorrow as the next big test for the USD.   

Other highlights for today

Today we get the US Durable goods orders for September, the USD Consumer confidence for October, and the US new Home sales figure for September, while ECB President Lagarde may make some statements and API’s weekly crude oil inventories figure. In tomorrow’s Asian session, RBA’s Governor Bullock is scheduled to speak, Australia’s September CPI rates are to be released. 

Charts to keep an eye out

NZD/USD Daily Chart

NZD/USD bounced on the 0.5670 (S1) support line, verifying its validity. The upward motion seems to have been interrupted and the RSI indicator leveled at the reading of 50, implying a neutral market sentiment. Hence we maintain a bias for a sideways motion currently. Should the bulls take the lead, NZD/USD may aim if not break the 0.5670 (R1) resistance line. Should the bears regain control over NZD/USD could break the 0.5670 (S1) support line and start aiming for the 0.5575 (S2) support level.

WTI Daily Chart

WTI’s once again bounced on the upward trendline guiding it yet is still just above the 101.00 (S1) support line. We maintain for the time being our bullish outlook for the commodity’s price, given that the upward trendline remains intact and the RSI indicator remains between the readings of 50 and 70, signalling a bullish market sentiment for WTI’s price. Should the bulls remain in charge, we may see WTI’s price aiming for the 108.85 (R1) resistance line. Should the bears be in charge, we may see WTI breaching the 101.00 (S1) support line and start actively aiming for the 94.30 (S2) support base.

DISCLAIMER: This content is for general informational and educational purposes only and should not be considered investment advice or investment recommendation.

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We are entering a busy week, full with high-impact financial releases and central bank interest rate decisions, yet the calendar seems pretty empty today and in tomorrow’s Asian and European sessions, with fundamentals probably leading the way in the FX market. For reference purposes, the USD seems to have halted its drop for the time being and seems to be gaining. 

Bearish tendencies for US equities as the week begins

We are still detecting mixed signals from US stock markets, yet in today’s premarket hours a bearish predisposition seems to prevail. Worries for the CapEx required for AI technology, as well as worries for inflationary pressures in the US economy tend to weigh on US equities. For the week, we highlight the earnings reports of Alphabet, Microsoft, Amazon and Intel, which could affects widely the market sentiment.

Oil prices correct lower

Oil prices tended to correct lower in today’s Asian session, after Friday’s rally. On a fundamental level, market hopes for an easing of the hostilities in the Gulf region tend to weigh on the commodity’s price. Yet the situation remains tense and its characteristic that the number of attacks on vessels sailing in the Straits of Hormuz reached its highest in the current month. Should we see market worries for the supply side of the international oil market intensify, we may see oil’s price rising and vice versa.  

Other highlights for today

No major financial releases are expected in today’s American and tomorrow’s Asian and European session.

As for the rest of the week

In Tuesday’s American session, we get the US durable goods orders for September and consumer confidence for October. On Wednesday we get Australia’s CPI rates for Q3 and September, from New Zealand we get RBNZ’s interest rate decision, the UK Government is to deliver Autumn statement, from Canada BoC’s interest rate decision and the highlight from the US the Fed’s interest rate decision. On Thursday we get Sweden’s GDP rate for Q3, Euro Zone’s Consumer Confidence for October, the US PCE rates for September and Q3 GDP advance rates and from the Euro Zone’s ECB’s interest rate decision. On Friday we get from Japan, BoJ’s interest rate decision and October’s CPI rates and September’s industrial output, France’s Germany’s and the Euro Zone’s GDP rates for Q3, Germany’s and France’s preliminary HICP rates for October and Switzerland’s KOF indicator for October. 

Charts to keep an eye out

USD/CAD Daily Chart

USD/CAD bounced on the 1.3990 (S1) support line, correcting higher after last week’s tumbling. The downward trendline guiding the pair seems to have been broken, forcing us to switch our bearish outlook in favour of a sideways motion for the time being. Yet the bearish market sentiment is still present for the pair, given the low level of the RSI indicator, which may renew the bearish tendencies of the pair. Should the bears regain control over USD/CAD could break the 1.3990 (S1) support line and start aiming for the 1.3880 (S2) support level. Should the bulls take the lead, USD/JPY may aim if not break the 1.4125 (R1) resistance line.

XAU/USD Daily Chart

Gold’s price dropped on Thursday and is currently testing the 3960 (S1) support line. We maintain for the time being our sideways motion bias for the precious metal’s price,  yet warn of any bearish tendencies given that the RSI indicator has neared the reading of 30, signalling a strong bearish market sentiment. Should the bears be in charge, we may see XAU/USD breaching the 3960 (S1) support line and start aiming for the 3600 (S2) support base. Should the bulls take over, we may see Gold’s price breaking the 4275  (R1) resistance line, and start aiming for the 4550 (R2) resistance level.

DISCLAIMER: This content is for general informational and educational purposes only and should not be considered investment advice or investment recommendation.

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In this article, you’ll learn what turtle soup trading is, how the pattern forms, why false breakouts happen, and how to apply this strategy within a structured technical analysis approach.

What is Turtle Soup Trading?

It is a trading strategy introduced by Laurence Connors and Linda Bradford Raschke in Street Smarts during the 1990s. It was developed as a counter-trend alternative to the famous Turtle Traders, whose methodology focused on trading breakouts above recent highs and below recent lows.

Instead of following momentum, strategy looks for situations where a breakout fails and price quickly reverses back into the previous range. The strategy is designed to identify potential exhaustion rather than continuation.

Understanding the Turtle Soup Pattern

At its core, the turtle soup pattern follows a simple sequence:

• Price breaks above a recent high or below a recent low
• The breakout fails to hold
• Price reverses back through the broken level
• The potential trading opportunity appears in the direction of the reversal

Originally, the strategy was defined using fresh 20-day highs and lows, although many modern traders apply the same principles to significant swing highs and lows across different timeframes.

Why False Breakouts Happen

False breakouts often occur around obvious technical levels where liquidity tends to concentrate. Support and resistance, previous swing highs and lows, and psychological round numbers frequently attract large numbers of pending orders.

When price briefly moves beyond these levels before reversing, the move may signal that breakout momentum has weakened. This is the type of market behaviour that such trading seeks to analyse.

The Role of Stop Hunts

A stop hunt is a term commonly used to describe a brief move beyond a key technical level that triggers resting stop-loss orders before price reverses. While the exact causes vary and should not be assumed in every case, many traders use this concept to explain failed breakout behaviour.

Recognising a turtle soup pattern does not guarantee that a reversal will occur. Instead, it provides a framework for evaluating whether a breakout is losing momentum.

Market Conditions That May Favour Turtle Soup Trading

This strategy is generally better suited to environments where breakouts struggle to generate sustained follow-through, including:

• Range-bound markets
• Low-momentum conditions
• Volatile news-driven price spikes
• Well-defined support and resistance levels

Strong trending markets are more likely to produce genuine breakouts, making counter-trend setups inherently riskier.

How to Identify a Turtle Soup Pattern

A successful turtle soup pattern begins with identifying a clear and well-defined swing high or swing low. The more obvious the level is to market participants, the more meaningful the failed breakout may become.

Rather than entering immediately, the strategy emphasises waiting for confirmation that the breakout has failed.

Step 1: Identify the Key Level

Look for recent highs or lows that have been tested multiple times. These areas often represent important decision points where traders are watching for either continuation or reversal.

Clear market structure is generally more useful than subjective price levels.

Step 2: Wait for Confirmation

Confirmation is one of its defining features. Common forms of confirmation include:

• Price closing back inside the previous range
• A reversal candle, such as a pin bar or bearish/bullish engulfing pattern
• Momentum beginning to shift after the failed breakout

Some traders also incorporate volume where reliable volume data is available, although price action remains the primary focus in many markets.

Step 3: Plan Entry, Stop Loss and Targets

In such strategy, entries are commonly considered once price has re-entered the prior structure. This helps avoid reacting to the initial breakout and instead focuses on the confirmed reversal.

Stop-loss orders are often placed beyond the extreme of the false breakout, while profit targets may align with the opposite side of the range or the next significant support or resistance level. Position sizing remains essential, as genuine breakouts can continue against the counter-trend view.

Common Mistakes to Avoid

Even traders who understand the turtle soup pattern can make errors in execution. The most common mistakes include:

• Entering before the breakout has failed
• Applying the strategy during strong directional trends
• Placing stops too tightly within normal price fluctuations
• Ignoring higher-timeframe market structure

The pattern is most effective when it forms part of a broader analytical process rather than a standalone signal.

Combining Turtle Soup Trading with Technical Analysis

When combined with additional technical analysis tools. Price structure, higher-timeframe trend context, and momentum analysis can all help traders assess whether a failed breakout aligns with broader market conditions.

For example, a turtle soup pattern on the hourly chart may carry greater analytical significance if the daily timeframe also shows an established trading range. Conversely, if the higher timeframe is in a strong trend, the counter-trend setup may require greater caution.

Why Multi-Timeframe Analysis Matters

Comparing multiple timeframes helps distinguish temporary volatility from meaningful market structure. Rather than viewing every failed breakout equally, traders can evaluate whether the turtle soup pattern fits the broader technical picture.

This structured approach encourages disciplined analysis instead of reactive decision-making.

Key Takeaways

Turtle soup trading is built around a straightforward concept: not every breakout succeeds. When price breaks an important level, fails to attract sustained momentum, and reverses back into the prior range. The pattern may provide a structured framework for analysing potential counter-trend opportunities.

Like any technical strategy, it does not predict future price movements or eliminate market risk. Its value lies in helping traders evaluate false breakouts through a consistent and disciplined analytical process.

IronFX provides access to a wide range of markets and advanced charting tools, allowing traders to apply strategies like this across multiple asset classes and timeframes.

Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication.

The post Turtle Soup Trading: A Guide to False Breakouts appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.

The USD seems about tio end the week in the reds for a second time. Markets are now focusing on the release of the Fed’s interest rate decision next Wednesday. Fed Fund Futures (FFF) imply that the markets expect the bank to remain on hold on Wednesday, yet at the same time they also expect the bank to hike rates in the December meeting. Overall, we expect the bank to remain on hold and given the inflationary pressures the bank may opt to maintain a hawkish tone in its forward guidance, given the inflationary pressures in the US economy, yet the easing of the US employment market may be advising some caution. Should the bank remain on hold and actually sounding hawkish enough to verify the bmarket’s expectations for a rate hike to come in its next meeting, we may see the USD getting some support, while US stock markets and gold’s price may head southwards.

Yet should the bank fail to sound hawkish enough, the market may be forced to ease its hawkish expectations and thus turn the decision into a dovish one, which could weigh on the USD and lift US stock markets and gold’s price. On a macroeconomic level, we note the relese of the US PCE rates, yet are not to affect the market’s expectations for the Fed’s decision as they are to be released on Thursday, nevertheless a possible faster than expected acceleration of rates could signal intensifying inflationary pressures, thus supporting the USD. Also, on Thursday we highlight the release of the US GDP advance rate for Q3. Should the rate acelerate beyond market expectations we ma ysee the USD getting some support, as it would be a signal of the US economy has grown at a faster than expected rate.

GBP – UK Government’s Autumn statement expected

The GBP seems to be about to close the week in the greens against the USD and the EUR, but not the JPY. With accelerating UK CPI rates for September, a faster GDP growth rate for August and a tighter employment market for the same month, convinced pound traders to buy the sterling. The calendar is rather empty of UK financial releases next week hence we expect the fundamentals to lead the pound in the coming week. On a monetary level, we note the market’s expectations for the BoE to hike rates in its November meeting. The market’s hawkish expectations tend to be supportive for the pound and actually the high energy costs, leave little rrom for Boe to maneuvre.

On a fiscal level, we highlight that UK Chancellor of the Exchequer John Healey, is to deliver the UK Autumn Budget next Thursday. The UK Government pledged for “growth in every postcode” and the question every one is asking is whether it will have to raise taxes to achieve it. A possible tightening of the UK Government’s fiscal policy, through the rise of taxes could weigh on the pound while conversely pledges for possibly increased fiscal spending could lift the pound. The UK government is in a rahter tight spot right now given its past promises and in the coming week is expected to be under the microscope of pound traders.

JPY – BoJ expected to keep rates unchanged

JPY is about to end the week in the greens against the USD, EUR and GBP being possibly the winner for the week in the FX market. On monetary level, we highlight BoJ’s interest rate decision next Friday, which may be the man event for JPY for the week. The bank is widely expected to remain on hold and currently JPY OIS imply a probability of 97.2% for the bank to rates at 1.25%. The bank is also expected to proceed with a rate hike in the December meeting. We expect the bank to remain on hold on Friday and issue possibly a hawkish forward guidance signalling its intentions to raise rates in its next meeting.

Japan’s CPI rates accelerated in September, beyond the banks’ inflation target of 2%yy, adding more pressure on BoJ to act as the risk of inflationary pressures surpassing the banks’ tolerance level, is now more than visible, fitting BoJ’s hawkish narrative. It’s characteristic how BoJ Deputy Governor Himino, even the day before the release, warned about the bank possibly moving too late in raising its interest rates, flagging the risk of high inflation. Overall we see the case for risks surrounding the event as being tilted to the bullish side for JPY. Also on a fundamental level we highlight JPY’s status as a safe haven, a factor that provided substantial support for JPY on Thursday, given the AI jitters in US equity markets.

EUR – ECB to stand pat, yet may signal hikes to come

The common currency seems to be losing ground across the board. On a fundamental level the protests in France turned violent over the past weekend, shocking EUR traders, while there is a political unrest across the Zone, which generates uncertainty about its political outlook, both weighing on the EUR. On a macroeconomic level the drop of October’s preliminary PMI figures, signalling a slow down in the expansion of economic activity wasn’t helpful either. In the coming week we may get some interest as we get the preliminary HICP rates for October of France and Germany and Euro Zone’s preliminary GDP rates for Q3.

A possible acceleration of the prementioned rates could generate some support for the EUR, yet that remains to be seen. The highlight of the coming week for EUR traders is expected to be the release of ECB’s interest rate decision, on Thursday. The bank is widely expected to remain on hold and currently EUR OIS imply a probability of 90.6% for such a scenario to materialise. EUR OIS also imply that the market increasingly expects the bank to hike rates in December, signalling that the market considers the current monetary tightening cycle as still open.

Should the bank signal more hikes to come in tis forward guidance, we may see the market’s hawkish expectations being verified and thus EUR getting some support. On the flip side should the bank opt for a more balanced approach, we may see EUR traders disappointed, selling the single currency.

AUD – September’s CPI rates eyed

The Aussie is about to end the week in the greens against the USD halting its drop. On monetary policy level, Aussie traders expect marginally the bank to hike rates in early November meeting, a scenario that tends to be supportive for the Aussie. The market’s expectations for RBA’s intentions are to be put to the test next Wednesday, as we get Australia’s CPI rates for September. A possible acceleration of last month’s CPI rates could push them higher than 4.00%yy, definitely higher than the bank’s 1%-3% inflation target zone. Such a scenario could enhance market expectations for the RBA to proceed to a rate hike.

It’s characteristic that Reserve Bank of Australia Deputy Governor Hauser stated that the inflation outlook is materially worse than RBAs’ forecast. On a deeper fundamental level, we note that the Aussie as a commodity currency, tends to be sensitive to the market’s risk on/off tendencies. Should the market’s sentiment improve, we may see AUD getting some support as it is considered a riskier asset in the FX market and vice versa should the market sentiment turn more cautious, AUD may lose ground.

CAD – BoC expected to hike rates

The Loonie is about to end a second week with heavy gains against the USD. As oil prices remain high, the Loonie tends to get some support on a fundamental level, given that Canada is a major oil producing economy. Yet in the coming week all eyes are expected to be on BoC’s interest rate decision. CAD OIS imply that the market is pricing in a rate hike by BoC next Wednesday, then the bank to remain on hold in December and hike rates again in January. CPI rates for September provided mixed signals by easing at a core level and accelerating slightly at a headline level.

Yet the high energy costs, tend to feed worries for inflationary pressures in the Canadian economy. We expect the bank to proceed with a rate hike, as does the market, yet the question is, whether the bank will signal more rate hikes to come. Should that be the case, we may see the Loonie getting some support. On the flip side should BoC’s forward guidance disappoint Loonie traders, we may see the rate hike turning to a dovish hike and weigh on the CAD.

Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication.

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It gives you a framework for understanding how buyers and sellers interact, rather than simply reacting to every move on the chart. You start to see the market as an ongoing negotiation, where price moves as participants search for areas of agreement. That change in perspective can completely reshape the way you read and analyse charts.

What Is Auction Market Theory?

Auction market theory, also known as market auction theory, is a way of understanding how markets arrive at a price. At its core, the idea is pretty simple: markets are constantly moving through an auction process, with buyers and sellers negotiating until they find a price where enough participants are willing to trade.

That area is often referred to as fair value. When price moves away from it, the market is essentially testing new territory. When it moves back toward it, the market is finding balance again.

A simple way to picture this is a traditional auction. If something is priced too low, sellers aren’t likely to accept it for long. Push the price too high, and buyers start losing interest. Eventually, the auction tends to settle around a level where both sides are comfortable doing business. Financial markets work in much the same way, only the process happens continuously and at a much faster pace.

The Two States of a Market

The theory views markets as moving between two main states:

• Balancing: Price is moving within a relatively defined range, as buyers and sellers agree on a level and the market builds value around it.
• Trending: Price is moving beyond that range and entering new territory, testing whether buyers or sellers are willing to keep pushing it further.

Knowing which state the market is in can help you avoid a common trading mistake: assuming every price move signals a new trend. Sometimes, the market isn’t trying to go anywhere at all. It may simply be finding balance within an established range.

Fair Value and the Volume Profile

Fair value is one of the key ideas behind auction market theory. It’s not about finding one exact price. Instead, it refers to the area where the market has spent the most time trading and where buyers and sellers have shown the strongest level of agreement.

This is where the Volume Profile tool can be useful. It shows how much trading took place at each price level over a specific period, making it easier to see where the market has spent the most time and found acceptance. The price level with the highest volume is known as the Point of Control, or POC.

When price moves above or below this area, the market may be entering a period of price discovery, testing whether buyers and sellers are willing to accept these new levels. If price moves back into the high-volume area, it can indicate that the market is returning to a level where there has previously been strong agreement.

What This Means for Your Analysis

Traders who use auction market theory don’t just focus on where price is. They pay attention to where the market has accepted price and where it has rejected it.

When a price level sees a lot of trading activity over several sessions, it usually means the market has found that area acceptable or “fair.” On the other hand, when price moves quickly through a level with very little trading activity, it can suggest rejection. These rejected areas can become important reference points later, as price may eventually return to test them again.

The same basic idea applies across different markets. Whether you’re trading forex, indices, commodities, or equities, the underlying auction process remains largely the same: buyers and sellers continuously interact to find prices that the market is willing to accept.

How the Theory Differs from Traditional Chart Analysis

Traditional technical analysis tends to focus on patterns, indicators, and what the chart is showing. The theory takes a slightly different approach. It focuses more on market behaviour: who is in control, where value is forming, and whether the market is accepting or rejecting certain prices.

That doesn’t mean you have to choose one approach over the other. Many traders use the theory as the foundation of their analysis and then add technical indicators to help with timing and confirmation.

The main difference comes down to context. A breakout might look convincing on a chart, but it can mean something very different depending on what is happening around it. If price is moving away from an established value area, for example, the breakout has a different context than if price is simply testing a level that the market has repeatedly rejected.

The Role of Time

Time is a dimension that many retail traders tend to overlook. In this framework, however, time can provide valuable insight into how strongly the market feels about a particular price. When price spends a lot of time trading around a level, it suggests that the market is comfortable there and has found some degree of acceptance. When price moves through a level quickly, it can indicate rejection.

This is one of the ideas behind tools like Market Profile, developed by J. Peter Steidlmayer in the 1980s. Rather than looking at price alone, Market Profile helps visualise how price and time interact. The shape of the distribution can give traders a clearer picture of where the market has found agreement and where it has struggled to establish value.

Key Concepts to Add to Your Analysis

You don’t need to rebuild your entire trading approach to use the theory. Start by adding a few simple concepts to your existing analysis:

Identify the value area: Find where most trading took place during the previous session or week. This gives you a reference for fair value.

Watch for rejection: Fast moves through a level with little activity can signal rejection and may become important if price returns.

Spot trends vs. balance: Ask whether the market is exploring new prices or building value within a range. The context can change how you approach a trade.

Use the POC: The Point of Control can act as a reference or “magnet,” with price sometimes returning toward it. It can help with targets and risk assessment.

These aren’t strict rules, just useful reference points for understanding market context.

Why This Framework Builds Better Habits

Auction market theory encourages patience. Instead of forcing a view onto the chart, it helps traders wait for the market to show its direction.

Markets can spend long periods in balance before making a directional move, so understanding this can help traders be more selective with entries and more disciplined with risk.

With tools like volume-based indicators, flexible timeframes, and access to a wide range of markets, traders can apply the framework across different instruments from a single platform.

Bringing It Together

Auction market theory isn’t a trading system. It’s a way of understanding what price is telling you in the moment. Instead of treating the market as a series of signals to react to, it encourages you to look at the bigger picture and make more deliberate decisions.

Markets constantly search for fair value through the interaction between buyers and sellers. Learning to read that process can become one of the most useful and lasting skills a trader develops.

If you want to explore the framework further, there are plenty of educational resources, tools, and market analysis available to help you apply these concepts to your own trading.

DISCLAIMER: This information is not considered as investment advice or an investment recommendation, but is instead a marketing communication.

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Maybe the most characteristic move in the FX market was the strengthening of the JPY yesterday against the USD, GBP and EUR, in a sign of broader strength of the Japanese currency. Analysts highlight a possible flight to safety by investors caused by worries about the soundness of AI trades as the main factor behind the strengthening of JPY. The carry-trade tendencies seem to remain present, while Japan’s September CPI rates accelerated beyond the BoJ’s 2% y/y inflation target rate, which may enhance the BoJ’s hawkishness.

US stock markets correct lower as AI worries weigh

US stock markets moved decisively lower yesterday. On a fundamental level, worries for AI spending tended to weigh on the tech sector. It’s characteristic that Meta Platforms slipped about 7%, while Advanced Micro Devices fell more than 8%, while Micron Technology dropped 6% and Nvidia 4%. On a fundamental level, the heavily indebted sector is expected to be challenged in a high interest environment and investors are increasingly worried about the high level of investment necessary. Should the market worries for inflationary pressures in the US economy and AI investments be enhanced we may see the US equities slipping.

Oil prices edge higher

Oil prices continued to climb higher with market worries for the supply side of the international oil market intensifying. Houthi attacks on Saudi Arabia, maintain worries for the Kingdom’s ability to deliver the necessary oil supplies. The inability of Saudi Arabia and the US to put the Houthi rebels under control, undermines the credibility of Saudi Arabia as an oil producer and investment destination. If we see tensions in the region and attacks on oil infrastructure persisting, we may see oil prices rising further. 

Gold’s price has bearish tendencies

Gold’s price presents some bearish tendencies. On a fundamental level, the rise of oil prices tends to enhance market expectations for inflationary pressures to remain high, in turn allow for market expectations for the Fed to tighten its monetary policy, thus weighing on gold’s price. It’s characteristic that even the wide drop of US bond yields did not create flows for gold, nor did AI related safe haven inflows support gold’s price.

Other highlights for today

In today’s American session, we get Canada’s retail sales for August, and the preliminary US S&P Global PMI figures for October, as well as the UoM consumer sentiment also for October. On Monday’s European session, we get Germany’s Ifo indicators and UK’s CBI Distributive Trades, both for October.

Charts to keep an eye out

USD/JPY Daily Chart

USD/JPY dropped yesterday, breaking the 157.50 (R1) support line, now turned to resistance. As the pair’s price action has broken the lower boundary of its past sideways motion has been broken, we switch our sideways motion bias in favour of a bearish outlook for the pair, while the drop of the RSI indicator tends to support our outlook. Should the bears maintain control, USD/JPY could aim if not reach the 155.00(S1) support base.  Should the bulls take the lead, USD/JPY may break the 157.50 (R1) resistance line and start aiming for the 160.50 (R2) resistance level.

US 100 Cash Daily Chart

Nasdaq dropped yesterday after hitting a ceiling on the 29675 (R1) resistance line. We maintain a bearish outlook for the index as long as the downward trendline guiding it remains intact. Should the bears remain in charge, we may see Nasdaq reaching if not breaching the 28200 (S1) support line and start aiming for the 87.55 (S2) support base. Should the bulls take over, we may see Nasdaq breaking the prementioned downward trendline, signalling an interruption of the downward motion and continue to break the 29675  (R1) resistance line, and start aiming for the 30770 (R2) resistance level.

DISCLAIMER: This content is for general informational and educational purposes only and should not be considered investment advice or investment recommendation

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The USD continued to lose ground in the FX market yesterday, yet across the Atlantic, the shock from the violent protests and the uncertainty for Eurozone’s and France’s political outlook still weighs fundamentally on EUR. Tomorrow, we highlight the release of the Euro Zone’s preliminary PMI figures for October and possibly lower than expected readings could weigh on the common currency. Across the Channel, the GBP seems to be the main winner in the FX market, despite any fiscal worries. With accelerating UK CPI rates and a tighter employment market, pound traders await the release of UK’s retail sales for September and preliminary PMI figures for October tomorrow, while BoE Governor Bailey speaks today and better than expected rates and figures along a possibly hawkish tone by Bailey could support the GBP further.

US stockmarkets correct lower

US stock markets were on the rise yesterday with SpaceX and Super Micro earnings reports boosting the market’s sentiment. Yet futures corrected lower during today’s Asian session as market worries for Tesla and its potential merger with SpaceX tended to worry investors. In today’s earnings calendar we note the releases of the less glamorous P&G, Lockhead Martin and Spotify. Fundamentally, market worries for inflation in the US and for AI trades are still present and seem to weigh on US equities, allowing for a more cautious market approach to emerge.

Oil gains some ground

Oil prices continued to correct lower yesterday yet jumped in today’s Asian session. The renewal of Houthi attacks on Saudi Arabia tended to intensify market worries for the supply side of the international oil market thus providing support on a fundamental level for oil prices. Possible further escalation of tensions in the area could provide additional support for oil, while an easing of the market’s worries could weigh.  

Gold slides lower for fourth day in a row

Gold’s price slid lower for a fourth day in a row. Market worries for inflationary pressures in the US remain high given also the high oil prices, thus weighing on gold’s price. Gold traders also keep an eye out for the Fed’s meeting next Wednesday at which the bank is expected to remain hawkishly on hold, and we note the event as the next big test for gold’s price.

Other highlights for today

In today’s American session, we note the release of Canada’s PPI rates for September. In tomorrow’s Asian session, we get the preliminary PMI figures of Australia, Japan and Japan’s CPI rates for September.

Charts to keep an eye out

GBP/USD Daily Chart

GBP/USD moved higher placing more distance between the 1.3300 (S1) support line and its price action. We maintain a bullish outlook for cable given also that the RSI indicator has risen above 50, implying a bullish market sentiment for the pair. Should the bulls continue to lead GBP/USD, the pair could break the 1.3510 (R1) resistance line and start aiming for the 1.3655 (R2) level. Should the bears take over, GBP/USD could reverse direction by breaking the 1.3300 (S1) support level, and start aiming for the 1.3155 (S2) support base.

WTI Cash Daily Chart

WTI’s price edged higher in today’s Asian session yet remained well below the 101.00 (R1) resistance line. The intact upward trendline and the RSI indicator being above 50, dictate a bullish outlook, yet we worry for WTI’s inability to form new higher peaks and warn of a possible stabilisation. Should the bulls take over, we may see WTI’s price breaking the 101.00 (R1) resistance line, and aim for the 108.85 (R2) resistance level. Should the bears take over, we may see WTI’s price breaking the prementioned upward trendline, continue to break also the 94.30 (S1) support line and start aiming for the 87.55 (S2) support base.

Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication.

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