Here’s an Economic Report, Now What?

The market has a tendency to react based on how people feel.

These feelings can be based on their reaction to economic reports, based on their assessment of current market conditions.

And you guessed it – there are tons of people, all with different feelings and ideas.

You’re probably thinking “Geez, there’s a lot of uncertainty in fundamental analysis!”

You’re actually very right.

There’s no way of knowing 100% where a currency pair will go because of some new fundamental data.

That’s not to say that fundamental analysis should be dismissed.

Not at all.

Because of the sheer volume of fundamental data available, most people simply have a hard time putting it all together.

They understand a specific report, but can’t factor it into the broader economic picture. This simply takes time and a deeper understanding of the data.

Single Currency Reporting

Also, since we reported most fundamental data only for a single currency, fundamental data for the other currency in the pair would also be needed and would then have to be compared to get an accurate picture.

As we mentioned from the get-go, it’s all about pairing a strong currency with a weak one.

At this point, you’re probably still waiting for the answer to “Will I ever need to use fundamental analysis to become a successful forex trader?”

We totally understand that there are purists on both sides.

Technical analysis seems to be the preferred methodology of short-term forex traders, with price action as their main focus.

Intermediate or medium traders and some long-term traders like to focus on fundamental analysis too because it helps with currency valuation.

We like to be a little crazy by saying you should use BOTH!

(Although don’t forget about sentiment analysis, psychology, and risk management as well!)

Technically focused strategies are blown to bits when a key fundamental event occurs.

In the same respect, pure fundamental traders miss out on the short-term opportunities that pattern formations and technical levels bring.

A mix of technical and fundamental analysis covers all angles. You’re aware of the scheduled economic releases and events, but you can also identify and use the various technical tools and patterns that market players focus on.

I have a couple of trade examples for you showing how the perfect blend of fundamental and technical analysis results in huge profits.

Check out Cyclopip’s huge win on EUR/JPY and Happy Pip’s 115-pip profit on NZD/USD.

There’s your answer!

Happy?!

In the next lesson, we’ll discuss the major fundamental factors that affect currencies.

These are interest rates, monetary policies, and market-moving economic reports.

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