Technical + Fundamental Analysis. Learn to see context and find precise entries.
Toggle elements to see how technical traders view the market through patterns and price levels.
High volatility for USD pairs; higher rates strengthen USD
Major employment report; strong jobs = stronger USD
Economic health indicator; higher GDP = stronger currency
War, elections, sanctions affect safe-haven currencies
Pro Tip: Switch between elements to see the connection. Often the best decision combines both approaches.
Uncertainty; look for confirmation from level/momentum
Absorbed minimum/maximum; reversal signal at key levels
Strong absorption; confirmation at key zones
Key price levels where buying/selling pressure is concentrated.
Diagonal lines connecting swing highs (resistance) or lows (support).
Indicators are mathematical calculations based on price and volume. They complement, not replace, price action analysis.
Important: Indicators complement, but do not replace, price action. Always consider the broader market context and use multiple confirmations before entering a trade.
Recognizable formations that often precede predictable price movements.
Key economic data releases that impact currency strength. Understanding what they measure and how markets react is crucial for fundamental analysis.
Track upcoming economic events and data releases. High-impact events can cause significant market volatility.
Forex Factory Calendar
Most popular forex economic calendar
Investing.com Calendar
Comprehensive economic data with filters
Important: Real market reaction can differ from textbook scenarios. Markets trade "surprise" (actual vs expected), not just the actual number. Always use stop-loss when trading around major data releases.
Understanding central bank stances is crucial for fundamental analysis. Hawkish policy supports currency, dovish policy weakens it.
| Central Bank | Current Rate | Stance | Last Decision | Next Meeting |
|---|---|---|---|---|
Federal Reserve (Fed) USD | 5.25-5.50% | Neutral | Held rates (Nov 2023) | Dec 2023 |
European Central Bank (ECB) EUR | 4.50% | Dovish | Held rates (Oct 2023) | Dec 2023 |
Bank of Japan (BOJ) JPY | -0.10% | Dovish | Held ultra-loose policy | Dec 2023 |
Bank of England (BOE) GBP | 5.25% | Hawkish | Raised 0.25% (Sep 2023) | Dec 2023 |
Policy Stance Definitions:
Hawkish
Favors raising rates to combat inflation. Strengthens currency.
Neutral
Balanced approach, waiting for more data. Mixed impact.
Dovish
Favors lowering rates to stimulate growth. Weakens currency.
1. Fundamental → Direction (Bias)
Use economic data and central bank policies to determine which currency should strengthen or weaken. This gives you the overall bias.
Example: "USD should strengthen because Fed is hawkish and NFP beat expectations"
2. Technical → Timing (Entry/Exit)
Use charts, patterns, and indicators to find the precise entry point, stop loss, and take profit levels.
Example: "Wait for EURUSD to break below support at 1.0850 with bearish candle confirmation"
1Fundamental Event
Scenario:
US CPI Data: Inflation comes in at 5.2% YoY vs expected 4.8%. Higher than expected inflation increases probability of Fed rate hike.
Fundamental Bias:
USD should strengthen → Bearish bias on EURUSD
2Wait for Technical Setup
Don't rush into trade immediately. Wait for price to reach a key technical level where your bias can be confirmed.
Price approaches resistance at 1.0950 and forms bearish engulfing pattern
Technical Setup:
Resistance level + Bearish engulfing pattern confirms downside bias
3Plan Trade with Risk:Reward
Define entry, stop loss, and take profit based on technical levels and desired risk:reward ratio.
Option A: Conservative (1:1.5)
Entry: 1.0945
SL: 1.0975 (30 pips)
TP: 1.0900 (45 pips)
R:R = 1:1.5
Option B: Aggressive (1:2)
Entry: 1.0945
SL: 1.0975 (30 pips)
TP: 1.0885 (60 pips)
R:R = 1:2
✓Why This Plan Works
⚠Remember: Even with both FA and TA aligned, trades can fail. Always use stop loss. Alternative scenarios include: price breaking above resistance (invalidates setup), or unexpected news reversing the fundamental bias. No analysis method guarantees success.
Trading foreign exchange and other financial instruments carries a high level of risk and may not be suitable for all investors. Past performance does not guarantee future results. Market reactions to news and data depend on expectations and context. Chart patterns and technical indicators do not guarantee outcomes. You should carefully consider your investment objectives, level of experience, and risk appetite before making any trading decisions.
This educational material is provided for informational and educational purposes only. It does not constitute investment advice, financial advice, trading advice, or any other type of professional advice. All analysis methods, indicators, and examples presented are for educational purposes to help you understand market mechanics. Always conduct your own research and consult with qualified financial advisors before making investment decisions.
The technical and fundamental analysis methods presented in this chapter are teaching tools to help you understand how professional traders approach the markets. Key points to remember:
Any examples, case studies, or scenarios presented in this chapter are hypothetical and for educational illustration only. They do not represent actual trading results or account performance. Hypothetical results have inherent limitations as they do not reflect actual trading conditions, market liquidity, slippage, or the psychological pressures of real trading. No representation is being made that following these methods will result in profitable trading.
By continuing to use this educational platform, you acknowledge that you have read, understood, and agree to these disclaimers. You accept full responsibility for your trading decisions and outcomes.
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