It has been 2 months now since i quit my job and started as a full time trader . Until now i am searching for the best way to analyse charts so that i can enter the market at the right time and exit with maximum profits , However after my continuous search and some #Deep-work. I found out that there is actually no perfect way , the better way is a mix of fundamental and technical analysis . Lets get straight to some examples
Below is a 4Hr chart of NZDUSD , where we have analysed technically seeing the price action that the price will go up and will follow the green arrow once it crosses the pink rectangle right above it , It will fall back and hit it again before it goes one leg up .
However it did not happen that does not mean we were wrong after that i looked back and checked how many time my analysis did not do well and what were the reasons ?. Am I missing on some key things ? .And what i found out was astonishing . FUNDAMENTAL REASONS
It was because NZD got some report on CPI and it was not satisfactory !!! . I Started wondering Am i a technical analyst why do i care about all these news events and fundamental reasons ?. Then after indulging more i found out that price moves up and down because of demand & supply and it is created by fundamental reasons . Technical analysis will give us an edge to use that information and earn exponentially
How do you actually blend both subjects and come up with an extraordinary output
Coming back to the above example where price did not go as directed rather it went down . The good part was we did not put a trade we waited for price action and clear bullish signal from the most recent candle , If you haven’t not checked my recent blog on how to read candles check this out Candlestick Patterns
Due to unsatisfactory CPI numbers price went down and touched our second support point , we were waiting to go long however due to huge selling pressure price broke the support and slipped even below . Now you might get frustrated from your analysis at this point but you have to be patient and carefully watch price action .
After price broke the support , Buyers came in strongly with a bullish engulfing candle , If you would have stick to your analysis and waited for the price action to show bullish sign you would have slept happily with some profits .
After back testing on few more cases i realized that a blend of both the concepts will always give u an extra edge , You should always consider fundamental events and their probable outcome and build more than one entry and exit points as per market conditions . A stronger data relating to particular currency will make the currency stronger and vice versa we should always give some room to these important events and look closely on macro economic factors particularly when do currency trading
You may keep a track of these important events from these two websites below
1.Forex Factory
2.FX Street
If you have not started trading yet and wanted to learn then read this Path of free living
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