Rumour spikes and the verification lag

[Fairman]

Rumour spikes and the verification lag

Headlines from social media, anonymous sources, and unconfirmed reports can move currencies in seconds. Then a denial arrives and the move reverses.

The structure is always the same. An unverified headline hits. Algorithms that scan news feeds react. Price jumps. Minutes later, confirmation or denial lands, and price shifts again.

Retail traders see the move on the chart, often just after it starts. Entering after the first move is entering at an inflated price. Entering on the reversal is trading the second event, with a better view.

What makes this hard is the time pressure. A rumour spike can last 30 seconds before the denial. The window for a decision is short.

A more resilient approach is to treat any sharp, news-free move with caution. If price jumps and no scheduled event explains it, check headlines before acting. The cause is often a rumour, and the reversal is often as fast as the jump.

How many unexplained spikes in the past few months turned out to be rumours, and what did the reversals look like?