The above candles are from a five minute chart (USDCHF) from November 7, 2008 at 8:30am Eastern, at the time of the release of the embargo on the non-farm payrolls for October. This is a very confused market reaction. Below is the actual non-farm payroll report:

"THE EMPLOYMENT SITUATION: OCTOBER 2008"

"Nonfarm payroll employment fell by 240,000 in October, and the unemployment rate rose from 6.1 to 6.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. October's drop in payroll employment followed declines of 127,000 in August and 284,000 in September, as revised. Employment has fallen by 1.2 million in the first 10 months of 2008; over half of the decrease has occurred in the past 3 months. In October, job losses continued in manufacturing, construc- tion, and several service-providing industries. Health care and mining continued to add jobs."

The employment situation was pretty dismal. Over 200,000 jobs lost and an increase in the unemployment rate. Yet, the initial reaction is dollar positive, the next five minutes is totally neutral followed by a small drop of approximately 50 pips.

Then there is a rebound in the dollar and the 50 pip loss is mostly regained (see the adjacent 5 minute chart from the CHFUSD).

This is the 30 minute chart from the GBP/USD pair at the same time. This showed considerable market indecision with a hammer like doji at 8:30 on increased volume.

The above candles are 5 minute charts (USDCHF) from July 3, 2008 at 8:30am Eastern, at the time of the release of the embargo on the non-farm payrolls for June. This is a fairly typical market reaction. While the actual number of jobs dropped again, it did not drop more than expected and there was no change in the unemployment figures. This was seen by the market as postive for the USD. If you were positioned properly at the start of this news there was a little more than 100 pips fairly quickly.

It is somewhat interesting to compare this market reaction to the previous market reaction from June 2008. A substantial loss of jobs in June (July nfp report) was seen positively while in May (June nfp report) a similar number of jobs lost was seen negatively, along with the rise in unemployment.

This is the 5 minute chart from the GBP/USD pair at the same time. This shows just the reverse of the USD/CHF pair with about an 80-100 pip loss over ten minutes. The only additional information on this chart is a few minutes of indecision with a moderately long-legged doji just before the 80-100 pip drop.

The above candles are 5 minute charts (USDCHF) from June 6, 2008 at 8:30am Eastern, at the time of the release of the embargo on the non-farm payrolls for May. This is a fairly typical market reaction. While the actual number of jobs dropped, it did not drop as much as expected. The really negative factor for the USD was the increase in unemployment from 5.0% to 5.5%. This most likely was the reason for the drop in the dollar seen in the above candles. There is about 80-90 pips in about ten minutes.

If you were positioned properly at the start of this move, you could have had a very successful trade.

This is the 5 minute chart from the GBP/USD pair at the same time. This shows just the reverse of the USD/CHF pair with about a 100 pip gain over ten minutes.

The above candles are 5 minute charts (USDCHF) from May 2, 2008 at 8:30am Eastern, at the time of the release of the embargo on the non-farm payrolls for April. This is a fairly typical market reaction. The non-farm payrolls didn't drop as much as expected and this was interpreted as good for the USD. There is about 100 pips in about ten minutes.

If you were positioned properly at the start of this move, you could have had a very successful trade.

This is the 5 minute chart from the EUR/USD pair at the same time. This shows just the reverse of the USD/CHF pair with about a 100 pip loss over ten minutes.

The above candles are 15 minute charts (USDCHF) from April 4, 2008 at 8:30am Eastern, at the time of the release of the embargo on the non-farm payrolls for March. The first image shows three doji's in a row, the middle doji (red upward arrow) is very long-legged. This is indicative of extreme market indecision. I had decided to ""sleep-in" since here in Arizona this was 5:30 am, probably a wise decision. Forex trading is risky when it is calm, very risky at the time of a major news announcement, like the nfp today.

If you could make a great trade on this nfp, you are a real wizard. I have just seen too many of these where you get these wide swings very rapidly which usually run your stops, and you just give money away.

This is the 5 minute chart where you can see a little better what actually happened. The nfp today was really "bad" news for the dollar. A loss of 80,000 jobs and a rise in unemployment to 5.1%. The dollar drops initially, but soon rebounds and then for a few minutes settles about where it started. How many times can one find this type of "opposite to what you would expect reaction to the news?"

Another possibility could be market manipulation. It is strange to get such a long-legged doji, -right at the time of the non-farm payrolls announcement. Also, this doji was in the middle of two other smaller doji's. For approximately forty-five minutes, the price was held relatively constant during the "most major" of news announcements.

The dollar finally starts down to end slightly lower than where the initial drop reversed. This example, based on real charts from today's nfp, demonstrates how tricky it can be to try to play the nfp. Even with some advanced knowledge, it would have been difficult to have a successful trade on this news. The only play was to sell dollars with wide stops (risky) and not try to exit after the initial nfp swing.

Discussion

The above candlesticks (5 minute charts) came from the FOMC interest rate announcement on Tuesday 8/08/06. The USD/CHF shows a morning star pattern soon followed by an evening star. The GBP/USD shows just the opposite. One lesson I have had to learn the hard way is that your own interpretation of the news is not what is important ... It is what the Market thinks about the news. The initial red candle (USD/CHF) is the market's reaction to the FOMC pause on interest rate hikes. This is followed soon by a shift in market sentiment (hammer) and a reversal (green candle) as indicated by the morning star pattern. This was the market's reaction to the wording surrounding the rate hike pause (ie promise of further rate hikes soon in the fall). This sentiment, however, was not too long lasting either (spinning top) as the green candle soon reversed as indicated by the evening star. Just the opposite occured with the GBP/USD currency pair. This was a nice display of some really pretty spinning tops and a hammer.

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