Unexpected economic reports often shake the market before traders have time to think. A small surprise in inflation, jobs data, or retail numbers can push currencies, stocks, and commodities in new directions within seconds. Traders watch how prices react in these first moments because the movement often reveals the market’s true expectations. Below, we explore what quick spikes, sharp pullbacks, or sudden calm can show, and whether investors see the surprise as a real change in the outlook or just short-term noise.
The Key Technical Signals Traders Rely On During High-Impact News
Price reaction signals are simply the immediate movements that occur on charts shortly after economic data is released. They inform traders about the market interpretation of new information and can appear in various ways. Platforms like TradingView make these signals easy to spot in real-time. To illustrate how these signals work together, let’s consider the May 2024 Core CPI release as a reference point. The report came in at 0.4% month-over-month versus the expected 0.2%, triggering immediate market reactions across multiple assets.
Below, we’ll examine the key signals traders watched during this event and continue to watch during similar surprises.
Price Spikes and Wicks
Sudden long wicks on candles show instant reactions to new information. They reveal where liquidity sits and how quickly buyers or sellers are stepping in.
During the May 2024 CPI surprise, EUR/USD showed long lower wicks as initial sellers were met with strong buying interest at key support levels.
Support and Resistance Breaks
High-impact news often forces prices to test or break key levels. A clean break shows strong momentum while a quick rejection signals hesitation.
The USD Index (DXY) cleanly broke above 105.50 resistance within minutes of the CPI release, signaling strong conviction behind the dollar’s rally.
Volatility Expansion
Bollinger Bands widening, ATR rising, or sudden wide candle bodies signal that the market is entering a high-energy phase. Traders use this to judge risk.
Gold’s ATR doubled in the first 15 minutes after the May CPI data, alerting traders that normal position sizing wouldn’t be appropriate.
Volume Surges
A sharp rise in volume confirms genuine interest behind the move. Low volume during a spike suggests the move may fade quickly.
The USD rally on the CPI surprise was accompanied by volume nearly three times the average for that time of day, confirming institutional participation.
Momentum Indicators
Tools like RSI, MACD, and Stochastics show if the initial direction has strength or if the move is losing power.
RSI on the 5-minute USD/JPY chart shot above 70 immediately after the CPI release and stayed elevated, suggesting sustained buying pressure rather than a quick spike and reversal.
Order Flow and Spread Changes
Fast widening spreads, sudden gaps, or big changes in bid-ask pressure help traders see how liquidity shifts when news hits.
During the May CPI release, EUR/USD spreads widened from typical 0.5 pips to over 3 pips in the first minute, showing liquidity providers stepping back as the market repriced dollar strength.
Recent Market Moves and the Signals That Appeared First
The truth is, most markets trade on expectations. When real-world events differ from insights from forecasts, traders tend to redirect assets instantly. Let’s discuss some of these triggers that can influence price reaction triggers.
Surprise CPI inflation
The Consumer Price Index (CPI) is used to measure the rate of inflation and assess the state of financial decisions within an economy. In simple terms, it is the difference between the price of goods and services over a stipulated time. The CPI report is issued monthly or quarterly, depending on the country, and it is important to traders because it influences the policies of central banks. This subsequently affects currency valuations and investment strategies.
When surprise inflation occurs and CPI beats forecasts, it’s common to find instant spikes in USD strength, which means that traders priced in higher interest rate expectations. Gold drops sharply, and the first candle shows a significant bearish move on gold without an upper wick. Looking at the aftermath of the May 2024 Core CPI release by the US Bureau of Labor Statistics. The USD immediately strengthened against other currencies. That was because the high inflation meant that the Federal Reserve would either maintain higher interest rates or even raise them further. Higher interest rates attract investors because they make them more money.
Non-Farm Payroll Reports
Non-farm payroll reports measure the number of workers in the United States, excluding farmers, nonprofits, active military servicemen, the self-employed, and private households. The report released by the Bureau of Labor Statistics shows the employment rate of the country.
When a non-farm payroll report misses the expected mark, it means that unemployment is rising and the Federal Reserve might likely cut interest rates. In September 2025, for instance, a release of the jobs market in August showed a major miss. The market expectation was set at over 750,000, but the actual result produced just over 22,000. How did the market react? The USD experienced a sharp and instant drop against major currencies like the euro due to the fear of interest rate cuts. Because interest rate cuts are better for stocks, United States stock indices like the S&P 500 initially experienced a jump in price.
Sudden Geopolitical Shock
These shocks are usually conflicts or escalated conflicts, and they often influence the US money market. It is common to find the USD strengthening against other currencies when conflicts arise in major economic centers of the world, like the Middle East. The Middle East has this influence because of its extensive oil-producing economies. When conflicts arise in this region, investors immediately seek a safe haven in the dollar, which causes the dollar to appreciate immediately. However, long-term trends are determined by subsequent monetary policies.
Tools Traders Use To Validate Signals in Real Time
As expected, traders need confirmation before acting on price reaction signals. With these tools, they can verify whether a move is genuine or simply noise. Here are some important tools to guide you on that.
- Economic news terminals: Bloomberg Terminal, Reuters Eikon, or, Forex Factory calendar, among others.
- Price action tools: We can study candlestick behavior, trend line retests, wick rejections, and support/resistance breakouts.
- Technical indicators and tools: Tools in this category include Bollinger Bands and Average True Range (ATR) calculations, among others.
- Sentiment and intermarket correlation tools: Sentiment indicators, such as the USD Index (DXY) and Treasury yields, can be used to confirm price reactions.
Reading Early Price Signals During Data Releases
When unexpected economic data entries hit the market, they often create the fastest and most unpredictable market moves. However, if a trader understands how price reaction signals work, it gives them an advantage. Early signals like order-flow imbalances, liquidity shifts, and key level breaks can keep traders one step ahead by helping them interpret market intent quicker and more accurately.
