Learn how to read the fundamental data just like a chart

Learn how to read the fundamental data just like a chart

Fundamental data can be read on a chart like any other, and Anna explains how in this video.

00:00

Webinar introduction and disclaimer

00:00

The webinar host welcomes participants from various locations, including the UK and the US. Before beginning, the host emphasizes the importance of the trading disclaimer, reminding viewers that trading carries significant risks and advising them not to use money they cannot afford to lose.

00:30

Audience and session overview

00:30

This segment introduces the audience, acknowledging the mix of returning Forex program students, book readers, and users of various quantum indicators. It sets the stage for the session by explaining that the focus will be on analyzing charts and futures markets.

01:01

Volume price analysis explained

01:01

The speaker explains that the focus will not be on stocks but includes some Forex content, analyzing charts through volume price analysis. This method examines price action alongside volume to understand current market behavior and predict future movements. Reference is made to several books available on Amazon detailing this methodology, including a comprehensive guide and specific versions for Forex, futures, stocks, and commodities. The session will also address topics prompted by an email and provide a trading lesson.

02:12

Importance of fundamental news this week

02:12

The speaker emphasizes the importance of this week’s fundamental news events, highlighting a calendar from Forex Factory. Although primarily focused on forex, the calendar also includes sections for metals and energy markets. This week’s releases are particularly significant across various trading instruments, including futures, gold, and oil.

02:49

Key economic releases and market mood

02:49

The week begins with key economic data releases, notably the Purchasing Managers Index (PMI) reports from major economies, starting with China. The Chinese manufacturing PMI, released early Monday, came in at 50, which is the threshold indicating economic expansion. Despite skepticism about the accuracy of such data, the market’s reaction is what truly matters, as traders and investors respond to these numbers, influencing market sentiment.

04:31

The Chinese PMI result sparked significant market movements, especially in the Australian dollar, which saw notable price action unprecedented in recent weeks. Understanding these fundamental data releases is crucial for traders, particularly at the start of a trading month, as they set the market mood. This analysis applies broadly across markets and asset classes, emphasizing the importance of fundamental data in shaping trading decisions.

06:10

Impact grading of fundamental news

06:10

The speaker explains how economic calendars categorize news events based on their expected market impact using a color-coded system similar to traffic lights—red, yellow, and orange—indicating high, medium, or low impact. However, the actual market reaction may differ depending on the economic context when the news is released. For example, the case manufacturing index is typically rated as low impact (yellow), but due to current adverse economic conditions, the market has assigned it more significance, influencing market sentiment beyond its usual classification.

08:05

Unemployment data and market reaction

08:05

Before the pandemic, unemployment was not a major concern for the US economy as employment rates were stable and jobs were being created. However, market reactions to unemployment data were minimal because it was not a critical economic phase. The speaker emphasizes that the market’s reaction to economic data, such as unemployment figures, is more important than the accuracy of the data itself.

09:20

Economic data can sometimes be leaked before official releases, causing unexpected market volatility, as seen with the Australian dollar reacting sharply to a leak. Leaks are a real phenomenon, and even prominent figures like Donald Trump have unintentionally hinted at data outcomes before release, leading to market sensitivity around such information.

11:09

The speaker illustrates how unemployment rates, shown through charts, were steadily declining before the pandemic, indicating economic stability. Despite skepticism about the accuracy of official statistics, the key point is how markets interpret these figures. Between 2018 and 2019, unemployment rates were steady, which reassured the Federal Reserve about the US economy’s health.

12:16

The pandemic caused a dramatic spike in unemployment rates, reaching levels comparable to the Great Depression, with forecasts predicting even higher numbers. This surge makes unemployment and labor statistics critically important economic indicators now. Similar trends are observed in Canada, and markets are bracing for potentially severe reactions to upcoming data releases.

13:53

Market reactions to unemployment data are now much more significant due to the high levels of joblessness. While historically these releases had impact, the magnitude of market movement today is far greater. The speaker notes that while some economic indicators show clear trends, others are more volatile or consolidative, affecting how they influence markets.

14:28

Retail sales, which once looked strong, have plummeted due to the pandemic, exemplified by Australia’s first recession in over 30 years. Fundamental economic news affects all markets, and traders must be aware of the timing and impact of key releases. Earnings seasons are also important for stock traders, but forex traders especially pay attention to these economic indicators because of their immediate market impact.

15:30

All financial markets are highly interconnected, so economic releases can impact a wide range of instruments beyond forex. Traders should monitor economic calendars, such as those from Forex Factory, to stay informed. Understanding and analyzing these data releases with the help of charts is essential, as some indicators show clear trends while others fluctuate within ranges, but all can influence market movements significantly.

16:33

Market reactions to news and ECB example

16:33

The speaker explains how news impacts the forex market, typically causing an immediate volatile reaction followed by a calming fade. Major reversals are rare; instead, markets often continue the initial trend after processing the full details. Using the recent ECB interest rate decision as an example, the speaker highlights how analyzing slower time frames, like the daily chart, can provide clues about potential market movements, exemplified by the euro’s behavior.

By Anna Coulling – creator of volume price analysis