Think both of you are correct, sort of. If you were caught in a short, the movement was @470 pips so that would put you on @12th (20.48lots) part of the sequence - no way would you have enough margin/funds to complete that.

However, if you go back a stage before the move, there was a short position taken at @06:30 (GMT) on the same day that would have closed with profit. So therefore, the system would have been long and the situation would not have occurred.

Its easy saying avoid the news in hindsight. There is lots of news every day.