An impulse can be divided into several stages:
– Initial impulse. Sharp, volatile movement caused by the release of news. It often starts in the first seconds after the information is announced.
– Correction. Large impulse movements are often followed by a correction, which can reach 1/3 or 1/2 of the impulse movement. It is usually less volatile than the impulse.
– Flat (consolidation). After the corrective movement, the market usually stops and flat trading begins. This is often the final stage of news formation, after which the impact of the news ends. The flat stage is the most important phase in the market’s search for the “fair price” of an asset after important news is released.