Fundamentals

 

Fundamentals play a huge factor in market behavior and also market maker behavior. If you go back and review the forex overview lesson, you should have a pretty firm understanding as to what fundamentals in the foreign exchange market are. It can be overwhelming at times, but with consistent studying and review of the news results and market results, you will get a very firm grasp on trading news. A lot of times news events don't go as planned because the market maker is going to make their move during a news event to cover it up and make people lose their shirt. Knowing the market maker cycles is an essential key to trading, but we will leave that for another lesson. I will attach below a list of news events. The following five news events are the main ones you should be watching and studying the movements of. The number next to them is the number of pips on average a pair will move during that particular news event.

NFP - 145pips

FOMC - 60pips

Trade Balance -70pips

CPI - 60pips

Retail Sales -80pips

 

When studying these pairs, you can either use http://www.forexfactory.com/calendar.php or another news site you prefer. You're probably saying "ok well great I know what to look for but how do I find it and use it?". What you need to do is stick to one pair, for now, you will open up your news site and look for one of the five events. Once you have found the event you will want to look at the last 2-4 times that the news was released, at the same time that you're doing this you will want to have your chart open to go to the date and time the news was released. This will show you where the market was before, where it went after the news and give you a base to compare to previous dates as well for future news events. You can not trade solely off of fundamentals as you need to take into account where in the cycle the market is and what the market makers intentions will be.

 

TECHNICALS

 

Technical analysis, as you should know from the forex overview consists of forecasting the direction of prices through the study of past market data, primarily price and volume. Technical analysis consists of support and resistance trend lines, horizontal support and resistance, moving averages, indicators, chart patterns and chart types. The main stuff we will focus on in this lesson will be both types of support and resistance lines. Always keep in mind the higher the time frame, the stronger the support and resistance level will be. So this means a support on 15m won't be as strong as a support on 4h. When drawing horizontal S&R lines, you want the line to at least hit three candles bodies on either the top of bottom of them, it can also be a mixture of the two. When drawing trend lines, you have two methods of drawing them. The first one would be connecting all of the bodies of the candles and the second method would be connecting the wicks of the candles. Check the video below to get a more in-depth teaching of this lesson. 

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