Technical Analysis

Fundamental Release

Leading Indicator combined with Fundamental Release:

This example shows how a trader following news events can use technical analysis to set up his trades and get a sense of the market before hand.

1. The analysis starts with the Dollar gaining on the Euro in a downward trend. On June 14th the trader takes a position somewhere in the highlighted candle. We wait for 3 confirmation signals that set up our buy decision.
   1. First, the red OBV trendline is broken on the upside.
   2. Price bounced down of its trendline two or three times before it too breaks through. In the OBV panel this break creates a new peak. Price then heads back below its trendline to break through it a second time.
   3. This second break, and the two blue candles afterward, coincides with a bounce up off the OBV trendline. This set up is the best indication to buy.


2. We draw new upward OBV and price trendlines using the first two lows.
   1. The OBV trendline is not broken until the middle of June 22nd.
   2. The price trendline is broken before that, on the 20th, in a whipsaw. The OBV trendline holds, showing support, in a sign that the bulls aren’t done.
   3. After surging upward, price falls back down and breaks its trendline at around the same time as the OBV break mentioned in note (a). Sell here at 1.2580.


3. A trader that is more experienced may add in and adjust his trendline as a third low was established. With new steeper trendlines the breaks would come sooner than with the flatter green trendline. However, this method requires one to be more of a short term trader.
   • These traders’ actions coincide with the purple trendlines.
   • Anytime price moves above the trendline it is a buy signal, and if price moves below the trendline we would sell.
   • The trading conditions presented are rather ideal and it would be hard to get the exact prices because of requoting or slippage and the fact that one may not be in front of their account at the time.

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