Using Price Actions To Predict The Fundamental Sentiment Of The Market

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Everyday different economic news events in the world are published through data or headlines on the internet via Forex calendars. This events causes volatility in the financial markets all over the world, hence creating a trend or reversing an underlying trend in the market. Also major causes of demand/support or supply/resistance in the market is when high impact fundamentals are released into the markets.


It is so obvious that fundamental news data, political and socio-economic events are the main drivers of the financial markets. These data and events accounts for the down pour of pips within a short duration and sometimes on a long term duration in the market. I have observed that that as a trader, its not the quantity of trades you take but most importantly the quality of trades. Do you know that with just 2 or 3 quality trades per week, you can turn your little account into a mega account over a period of time. Professional traders know consistency is the key to success.


Using price actions to predict high impact news could be a very rewarding way of trading the Forex market. There’s nothing like being ahead of the crowd before the big moves occur. Most times the market leaves a footprint of what its about to do before it actually happens but we do not pay keen attention to it. The problem is we are to over-whelmed with our ego, we always want the market to do what we actually want it do when its meant to be vice-versa.


For example in the picture below is a GBP/USD chart. The market already gave a footprint of its next move before the GBP Official Bank Rate, Monetary Policy Summary and MPC Official Bank Rate Votes was announced in October 8, 2015. All we needed to do was to sell the pair few seconds to the news release. This way we are way ahead of others and can maximize profit and limiting risk.

GBPUSD Interest rate

Take note that before the announcement, the market already formed a bearish engulf pattern which gives a signal of a selling possibility.


Another example is a picture below which shows the USD/JPY chart. The market gave another pathway of its next move after the Japanese Yen published its GDP data on November 16. If you look at the chart well, you will notice an engulf pattern candle formation after the news was published which emanated into a trend.


Fundamental releases accounts for more than 80% of major trends in the FX market, if a trader can master the skills of trading these economic news releases incorporating technical analysis with it, then the sky is the starting point of success. Do not forget nothing is 100% in FX trading, the only holy grail that exists is the trader’s psyche. Hope you find this article useful.



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