News-reaction framework
Studies post-release price behaviour while treating spread and slippage as primary variables.
Keep the chart simple
What needs to be in place first
- Release timestamp and revision policy are exact
- Trading permission and platform restrictions are checked
- Maximum spread and latency rules are hard limits
See news-reaction framework from both sides
Choose a direction and follow the chart from setup to entry, stop and planned exit. The method stays the same; only the directional comparisons reverse.
Entry is above the trigger, invalidation is below the setup and a profit exit is above the entry.
- EEntryLONG ENTRY / NEXT M5 OPEN
- SStop / risk limitLONG STOP / BOX LOW
- TTargetLONG TARGET / 1.5R
The archived surprise establishes the negative-USD direction. The first two completed post-release bars freeze a stabilisation box; after spread normalises, a later completed close above the box leads to a next-open long with the opposite box edge as stop and 1.5R or 12 bars as the planned exit.
A chart break without the archived negative-USD surprise, spread recovery and account permission is not this long method.Check the market first
Absolute headline surprise must be at least 0.2 percentage points versus the archived consensus; revisions are recorded but do not alter that original surprise.
Wait for the entry rule
From bar three through bar six after release, enter at the next M5 open after a completed close beyond the stabilisation-box high for a positive USD reaction or below its low for a negative USD reaction. For EUR/USD, positive USD means short.
Place the stop before entry
Stop at the opposite side of the stabilisation box. Risk 0.20% of equity, rounded down to 0.01 lot; reject any fill with more than 1.0-pip adverse slippage.
Know how the trade ends
Take profit at 1.5R or close 12 completed M5 bars after entry, whichever comes first.
Worked example: US CPI five-minute stabilisation break
This version of News-reaction framework chooses one answer for every decision so you can repeat it. Treat the settings as a starting point to test, not as proven or recommended parameters.
EUR/USD M5 only; US Consumer Price Index releases listed by the US Bureau of Labor Statistics.
Release timestamp is read in America/New_York and stored in UTC with the applicable daylight-saving offset.
Demo replay only: no order is allowed before the release or during the first two five-minute bars.
Before release, archive scheduled timestamp, consensus headline month-on-month CPI, prior value and revision policy.
Record one-minute Bid/Ask spread where available and aggregate M5 candles without discarding the release gap.
Add Wilder ATR(14) on the pre-release M5 bars and mark the high/low of the first two completed post-release bars as the stabilisation box.
Give every tool one job
Direction, timing, volatility and risk are different questions. This stack assigns them rather than asking one indicator to do everything.
Defines the event surprise using information available before and at release.
Forces observation of post-release structure before a directional trigger.
Acts as a hard execution filter rather than an after-the-fact explanation.
Scales exceptional post-release range; it does not predict the reaction.
- Absolute headline surprise must be at least 0.2 percentage points versus the archived consensus; revisions are recorded but do not alter that original surprise.
- After two M5 bars, displayed spread must have returned to 2.0 pips or less and the stabilisation box width must be no more than 4.0 × pre-release ATR(14).
- The account or prop-firm rules must explicitly permit the planned post-release window; uncertainty means no trade.
From bar three through bar six after release, enter at the next M5 open after a completed close beyond the stabilisation-box high for a positive USD reaction or below its low for a negative USD reaction. For EUR/USD, positive USD means short.
Stop at the opposite side of the stabilisation box. Risk 0.20% of equity, rounded down to 0.01 lot; reject any fill with more than 1.0-pip adverse slippage.
Take profit at 1.5R or close 12 completed M5 bars after entry, whichever comes first.
Cancel when surprise is too small, spread/box/account eligibility fails, no close break occurs by post-release bar six, or simulated slippage exceeds the hard limit.
Use recorded Bid/Ask where available. Fallback stress model uses a 2.0-pip spread at entry, 1.5 pips at exit, 0.5-pip adverse slippage per fill and zero commission.
Move through the chart one decision at a time
- Before 08:30 New York
Archive consensus CPI at 0.2% month-on-month, scheduled time, account permission and pre-release ATR; place no order.
- 08:30 release
Official CPI is 0.4%, producing the minimum +0.2-point surprise. EUR/USD gaps lower and spread widens; still no order.
- Bars 1–2
Let two M5 candles complete. Freeze their combined high at 1.0840 and low at 1.0800 and record the box width.
- Bar 3: filter
Spread returns to 1.8 pips and box width is below four pre-release ATR, so observation may continue.
- Bar 4: trigger
EUR/USD closes below 1.0800, consistent with the predefined positive-USD direction; enter short at the next open only if slippage stays within one pip.
- Bars 5–16: resolve
Stop remains 1.0840, target is 1.5R and unresolved exposure closes after 12 bars; log rejected fills as well as filled trades.
A rejected example
Reject a technically valid box break when spread is 3.4 pips. A later normal spread cannot be backfilled into the entry assumption.
Common variations
- Separate variant only: US payrolls with its own consensus and revision fields.
- Separate variant only: direction-neutral first box break.
- Separate variant only: wait for a break-and-retest rather than next-open entry.
Rebuild this method on the platform you use
The written rules work independently of the charting app. Match the same feed, timeframe, indicator settings and completed-candle timing before comparing results.
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Keep every test organised.
The CSV gives you one place to record the setup, costs, execution, outcome and whether you followed your rules.
Download test-plan CSV ↓