Technicals still matter more than fundamentals?

Trading Discussion News and Economy
1

hi, i regularly look at some of the forex calendars around, and i notice that not many news has effects on the prices, even if its labelled ‘high impact’ (except interest rates of course)

i trade the gbpusd, but i dont see any impact when most news comes out different from the analysts guesses. i am especially stumped when i see things like this: USD actual < forecast (which means its weaker right) and around the same time GBP actual > forecast (which is supposed to be stronger), but the GBPUSD just keeps heading down as though there was no news.

wassup with that? just as a general view, how do you guys trade the news? are you guys in it for like long term daily chart kinda thing?

2

Most of the time the news is of little consequence however that doesn’t mean that I would place a trade before a high impact announcement :smiley:

The chart is all that matters; who is holding onto profit?
What would be a low probability trade and how can I fade it?

To me that is all that really matters :wink:

3

the market tends to react to news releases before it’s released. so if a news release is good then the price will react by going up as time approaches the news release. of course, if everyone was wrong, you’ll get a pretty big correction.

4

Why do people keep asking this question again and again?

The market movements are already determined way in advance, and thus fundamentals are really just there as smoke screens. However, it might seem that fundamentals do have an effect to some people because of the level they are at but we will see things more clearly when we graduate to the next level.:smiley:

5

fxelitetrader has it pretty well right as one must FIRST understand that currency prices are CONTROLLED by the interbanks so that money can be made by trading UP to resistance and DOWN to support !

the banks (and any decent trader) ALREADY KNOWS these points, and while they allow news releases to ALTER the trend momentarily, the MAIN DIRECTION AND RESISTANCE POINTS are what is the only important thing.

if the banks are driving the price upwards and you receive bad news (and that bad news WAS anticipated, such as all the USD news concerning payroll and housing over the past year) the banks will slowly RAISE the prices overnite (BEFORE the US news) so that they can they SHORT the release ---- IMMEDIATELY AFTER THE NEWS, the banks(usually within a half hour) RAISE the prices up to the major resistance area, SO THEY CAN SHORT FROM THE HIGHEST PRICE.

After they drive the price DOWN to major support levels, the currency price then moves BACK to where it deviated when the news was released, which a simple trend line will show.

NEWS has a lot of temporary effect, as it allows a lot of spot trading and fast profit to be made, BUT IT NEVER INFLUENCES THE MAJOR TREND, which can be shown by anyone using the LRC on their charts.

The reason i repeatedly state that forex is one of the easiest games in town is because, once a newb has EXPERIENCE, trading with the trend will NEVER turn a loss !

Its actually so simple it makes me cry to watch so many people asking the same question, over and over and over and over and over and over and over and over and over and over and over !

enjoy and trade well

mp

6

for Eur/USD reportedly is changing all the time. Strategists who claim to have experience say it is up long term one week, and down long term another week. I know the markets have been choppy due to holiday periods. But is that really all it is? How can the dollar get stronger if Obama is going to pursue an easy money policy to please all the private interest groups (abroad and at home) who helped elect him? I don’t blame the guy for the problems, but he is in a tight spot of sorts.

And as waning as the euro economy is now, I can’t see how the consumer credit problem is not and will not continue to worsen in a greater way here, in the US. It’s easy to understand the USD being seen in the world as a stable currency, of sorts, for several reasons. However, why it would appreciate short OR long term against the euro is elusive to me. I do not care either way. I am just trying to learn to recognize/anticipate trend.

If anyone can clear this up, it would be greatly appreciated :wink:

–Jackie

7

i will try to state this in slightly different terms than ive used — IT DOESNT MATTER WHAT THE HELL GOES ON — THE BANKS KNOW WHERE THEY WANT THE PRICE TO GO and they will base it on the price of corn dogs, if it suits them !

take a look at the enclosed chart — the GREEN lines are the LRC and the white line is simply a 14ema, which produces the absolute simplest of what might be called a “system” BUT THE LRC IS WHAT YOU LOOK AT !!!

SEE how it bounces from the bottom (support) to the top (resistance) and then does it again and again and again — see the green lines and a major UPTREND.

use whatever excuse you wish, but essentially the banks want the position LONG now, instead of the SHORT that it was for so long — they drove the price DOWN to support and now they will run it up to RESISTANCE.

THAT IS THE WAY FOREX WORKS, ALWAYS HAS AND ALWAYS WILL — fundamentals are a joke !

enjoy and trade well

mp

eurusd H1 with LRC and 14ema.jpg700×407 68.6 KB

8

Well I supremely thankyou for that expounded viewpoint! It was quite frank and illuminating.

I can be somewhat cynical of intent or process in the markets and the world at times. However, LITTLE of it surprises me, because I believe that people naturally will do what they want to do no matter what the circumstances. What the banks do or do not do does not surprise me.

All I care about is learning how to view trends. I understand that reality factors of dynamics with governments and economies are always going to influence price. However, I care more to interpret what is happening, indeed to be able to somewhat predict what will happen (for obvious reasons), than I do to explain WHY things happen.

Im very very new to Forex, so looking at charts in my sleep is not second nature to me yet. So again, thankyou for your illumination. Explaining support/resistance is not as simple as it may seem on countless tutorials, forex or not. I’m spending all my time with eur/usd. I enjoy every bit of it, and I think about little else other than educating myself on the interworkings of the markets. Having graduated as a bio major last may, I obviously have a LONG LONG way to go.

9

ahhhhh — now i can teach and not just rant

notice the green lines ? For all the words and all the descriptions they are essentially nothing but a couple of trend lines — if the trend starts at the bottom left and moves to the upper right, we almost universally call it an UPTREND, and the reverse holds true and then we call it a DOWNTREND, except in BeaverTail, Wisconsin, where they tend to do some things differently.

If you ever get in trouble telling which way the trend is going, show it to a 5 year old — they get it right every time !

now what you are looking at is the PRESENT MAJOR TREND for eurusd on the H1 and ass the price reaches the top or bottom lines, we so called traders now watch intently to see if the lines will hold or they will break, and we then trade accordingly (there are also a slew of indicators that will tell you the truth about whats soon to happen, but i find they have to talk “dirty” to you first — perhaps just to build some excitement !

IF we do not break through the TOP line and candles start turning RED and falling down, we pretty much can assume a short situation, at least till the middle dotted line, where “usually” (unleass driven by extreme news which creates high momentum, the price will go under and then come back over and then finally settle at the midpoint where it consolidates for a wee bit of time (usually a week or so), letting traders adjust positions, play the range and generally have a swell old time for a while.

After the fun, momma yells that dinner is being served and the price dives down to find its loving home at the bottom line, or what some traders (except those in Beavertail, naturally !) call SUPPORT.

after the meal, a few beers or cognac (beer in beavertail), and the price starts to want to see the lights of broadway, but they are WAY UP there, so what do you think will happen next ?

Forex is Forex and it is the most trending beastie in the whole beastie world of trading, but it is NO beast ---- all you gots to know is what is in the mind of those greedy bankers, and just follow along for the ride !

THAT WAS THE CHEAP LESSON – the next one costs $1000 !

oh yeah — my apologies to Beavertail, but your story HAD to be told !

enjoy and trade well

mp

10

I suppose one would have to consider which timeframe was in question…

A five year old can see a trend on an hourly chart, and possibly on a daily chart as well. But there are all different forms of forex trader, with an array of personalities and patience schemes to match. And the average five year old, I’m sure, cannot interpret/explain elliot waves on first glance (much less the average/or crazy 25 year old, perhaps in my case). So, as always, experience and information are king.

The banks do what they want, or what they dont want, in any event. But how do we know what that is until the news hits the wires, or unless we have a buddy inside the circle (as opposed to outside, to allude to mr. gordon gekko’s comment).

What I’m curious to know, is when and how to look at a specific chart, when to know whether or not the price is about to climb or fall off a cliff (doesn’t everyone?)

Does it amount to viewing slightly shorter bearish candlesticks after relatively long ones following a peak—to determine whether or not the price is about to dive? (vice versa for the climb). This a small, seemingly nonsensical observation I’ve made on many charts. However, it doesn’t have much to do with extending trendlines and drawing fib retracements—then waiting to see if price breaks above or below those levels. (Yes, I do get the guerilla wait and see approach).

What timeframe are you typically using and why? And which indicators do you find to be most readily indicative of change in direction?

So far, Parabolic S&R with stochastics and RSI have worked for me on 5 & 10 min charts. But I would like to anticipate the move before it is already underway.

Very entertaining reading your metaphorically-rich posts HAHA :smiley:

11

i was given two eyes at birth, although i certainly could have used more brains, as is so often said.

now THAT said, if you LOOK before news, you will SEE what happens !

and if you see it a few times, you will be ready !

the nite before, are the banks DROPPING or RAISING the price ? and what are they doing just before the news release, and then what happens for the next half hour, and then what happens after that ?

timeframes dont matter, except its easier to see the moves on a smaller timeframe than on the higher !

i WILL NOT spoon feed you, and no one else should either — exercise those two orbs and that one brain and you shall SEE EXACTLY WHAT HAPPENS !

MP

12

thanks for the insight, and my apologies for asking an already answered question :wink:
what is your method for drawing a linear regression channel? i cant seem to find any in-depth article for that online

13

if you are using MT4, simply google for “SHI_Channel_true” and stick it on your charts ---- that will give you a MAJOR TREND CHANNEL for the timeframe that youre looking at and works on ALL timeframes !

dont forget to save the template with the channel ON IT, or it will be gone next time you open the program.

to then see the MINOR channels within the MAJOR channel, simply use the LRC TOOL built into MT4 which does NOT appear automatically when you open the program but must be gotten thru “customize” on the FIRST toolbar (which contains other channels and trend lines)

get it by RIGHT CLICKING on the first toolbar and opening “customize” — its in THERE !

enjoy and trade well

mp

14

In the short term, news events CAN create huge whipsaws and will affect short term traders.

For long term traders, it’s better to look at news events collectively to paint an overall picture of that currency’s economic health. If you can put together the chains of an economic downfall/uprise, you will be ahead of the game and can run with it.

15

ok, lets answer the question a bit better ---- if the overnite trades take the price UP before USD news, one watches before the news to see if it will continue UP – IF BAD NEWS IS ANNOUNCED and the price CONTINUES UP, it is heading towards major resistance (usually the H1) AT WHICH POINT THE MARKET WILL REVERSE DOWN, which is the direction you assumed it should based on the news,

reverse (or turn your monitor upside down) for GOOD news !

the banks RAISE the price as high as they can for that half hour or so after news release, so that they have the MOST room to SHORT for the rest of the day, and probably the next 2 days. They LOWER the prices for exactly the same reason, as long as you have your monitor standing on its head !

enjoy and trade well

mp

16

mp6140, tomorrow at 7am EST, the GBP will have its official bank rate announced (with a reduction of 50points), so according to my understanding, you mean to say that the GBPUSD will continue to move in an upward trend (even today’s market) until that point? Or are you saying that the prices rise only a short while (eg half hr) before the news is announced?

17

lets see if they can get it to 5052 before reversing

it usually happens overnite, but depends on how far they need to move price up – you will definitely see it half hour before announcement

mp

18

Interesting observations as usual MP… I’ll keep a watching brief on cable.

Jawnlooi is right though, the news is having far less impact than it used to - say 1 year ago. Why do you think that is?

What’s your thoughts?

Happy NY btw!

19

there should be some pullback today with continuation tonight, but remember we have NFP coming up this week, so they will have to run it up, drop it down and be ready on friday to run up again and then drop, prob on monday !

LETS SEE cause its hard to predict multiple news releases !

as far as news, please remember im a tech geek so its only a personal thought, but we have SO much news now that affects SO much (for a long time ONLY US news was impt and now its everyones news) that the banks simply cannot move prices around fast enough to handle the different countries, plus TODAYS trader is a tech driven trader, more interested in the shorter term gains and not so much in playing the banks game !

my opinion, for what its worth !

mp

20

Tech geeks clearly know a lot! Let’s see what happens.

Cheers