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Intro To Fundamental Analysis Part 2

Intro To Fundamental Analysis Part 2

Focus On The Central Bank

Let’s say the Central Bank is focused on inflation – If the Central Bank is worried that the inflation is too high then we know that they are heading towards an interest rate increase – Hence the currency will increase in value.

Central Banks will focus on a maximum of two things at once and once we know what they are focusing on we can then will use and know it will affect the market.

Pay Attention To The News

Bloomberg.com – Read articles in the currency section pay attention to articles that give information on the reasons for a particular move in a currency and the analyst expectation for the possible continuation of that move.

Fxstreet.com – News calendar, this allows you to see a list of economic data that will be coming out.

Ransquawk.com – Real-time news feed and analysis (premium service)

Fundamental Trading

Reason for the move – First identify the cause of the move using the news sources is it because of an economic announcement, rising oil prices.

Fundamentals – Identify the overall fundamental picture of that currency use the news sources to find out what the Central Bank is focusing on and which way the currency should be going.

Fair Price – What is the fair price of the currency based on the cause of the move and the fundamentals.

Sentiment – The mood of the market very often the fundamental may pint towards the market moving up but instead te market moves down this is often just a change in sentiment and is temporary.

Sentiment change may be caused by traders taking profits and as a result, we see a temporary change in the direction of the market but so long as the fundamentals remain unchanged the market will eventually go in the direction of the fundamentals.

This post was taken from my blog at forexblogz.kbasante.com

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