"When the fist of fundamentals meets the face of technicals, the patient usually falls down," I announced in my typically hyperbolic fashion. The US Retail Sales numbers had printed much hotter than forecast and the market moved sharply higher taking USD/JPY up by 30 points in the first five minutes of post news trade.

The key question facing the traders in the room was-- trade it or fade it? I had already taken out a quick 10 points out of the trade in the first few minutes of action, but the discussion turned as to whether the position traders should hold on for further gains. The price had hit technical resistance and was unlikely to go much higher. I took the opposite point of view believing that USD/JPY could rally more as the day progressed given the nature of the news. In the end, I turned out to be right as the pair tacked on another 60 points before finally petering out and ironically enough retracing almost all the gains.

I share this little vignette not to gloat about my forecasting skills, but rather to point out a trading truth I’ve learned the hard way -- price is not everything. In a world of charts and indicators and support and resistance levels, we tend to venerate price activity above all else. But price is often not the master, but rather the slave to news.

Technicians love to point out the multitude of times when news fails to move the price in the expected direction, but when you look at those examples on a case by case basis rarely do they happen when the news produces a major surprise. Certainly news well anticipated will have minimal impact on price, as market will often adjust ahead of time to the data. However, when the news is unexpected it tends to have a meaningful impact on price action that does not get captured in the first five minutes of trade.

Financial markets are vast and it takes some time to change people’s attitudes. As speculators that’s all we do -- we trade perception. Ironically enough, there are plenty of intelligent, well reasoned voices that argue that today’s Retail Sales statistics were suspect. And they may ultimately they may be proven correct.

In currency, we trade perception and perception is driven by newflows and priceflow. That’s why as traders we must be complete mercenaries, holding allegiance to neither techncals nor fundamentals and only act when we see an alignment in both.

Boris Schlossberg serves as director of currency research at GFT, and runs bktraderfx.com.