Technical Analysis

One of the most exciting elements of using Technical Analysis is the whole premise that the price discounts all news and world events and that you only have to trade the price action.  Most Forex courses and techniques are based on Technical Analysis.

How convenient and easy is that!!

This has caused a whole religion of Forex traders with such faith and belief in Technical Analysis that everything else was conveniently ignored and regarded as a distraction. You can hear them shout: “I don’t need to know what is going on around me because Technical Analysis is my guide and the way – it gives me the warm feeling I need and everything I would ever want” they never add “I am not really profitable yet but soon will be – I am so close it hurts”

This blind faith and belief that all information is already discounted into the price has immediately turned all Forex traders into lagging indicator traders.

Yes, many believe that the price is a leading indicator. As a reminder all price levels and indicators run off the price.

Case for Fundamental Analysis

You only need to wake-up and see the facts for what they are to know that this is not the case.

The facts are that Fundamental information like economic news, currency confidence, reactions to unexpected news and results and world events drive the Forex market price levels in definite directions. It is the fundamental relative strength of currencies that drive price movements and decisions of the major players in the market.

Technical Analysis is only a tool to find economic entry points once you already know where the market in heading because of the direction Fundamental analysis has given it.

If anybody has ever studied order flow and trading volumes they would realize that the big boys / girls push the price in the wrong way with small orders placed at low volume times of the day and then pounce into the market with a massive order in the right direction at times when the market is open to direction suggestions. That is what causes those famous pin bar reversals and why they are so reliable. The big players make money both ways.

Anybody who has seen the sometimes violent impact of economic announcements on price must surely acknowledge that news plays a role in the direction the price will move and technical analysis is often a useless tool to use.

You only need to study the causes of trends and turning points like Barry did to realize that decisions based on fundamental information have caused the market to start trending for a sometimes natural position and even while trending in the other way.

The Balance

One of Barry’s strengths is that he objectively sees the Forex market for what it is and how it behaves and not how other people want us to see the market. His conclusions are based on personal observation and experience over a number of years. He was far from perfect at the beginning.  That is why he has a technical trader and a fundamental trader in the trading room at all times. It is often difficult to do both at the same time.

When we started this series we got a number of emails saying: “Does Barry use the RSI” or “Does he use this or that indicator?” If you have read every module of this course so far you should start to realize that what sets Barry apart from other Forex traders in not the actual trading Technical Analysis techniques he uses. Many think the first few modules are merely an unimportant introduction or overview. They are the course! Sorry to burst your bubble but there is a large chance of failure when using Barrys  Technical Analysis trading techniques if the other elements are not in place. Barry succeeded because he took the Road less Traveled

In future modules we will look at actual ways to get a good feel of what is going on in the Forex market from a fundamental perspective.