Forex Fundamental Analysis is usually an intimidating subject for Forex traders and let’s face it, it’s much easier to look at technical indicators, moving average crosses, or Fibonacci retracements rather than “read between the lines” on Bernanke’s 22-minutes speech and make split-second trading decisions. But the same could be said about Technical Analysis methods such as the Elliot Wave theory or the infamous Neural Network based trading, and the conclusion is that in order to master either Fundamental or Technical Analysis, it would require investments of both time and efforts…
That’s why we created the Fundamental Forex Outlook, our goal is to make the daunting task of forex fundamental analysis bearable for the average trader, by providing you with the right tools such as: breaking news, commentaries, historical charts, and fundamental scores at your fingertips, helping you make the right trading decisions.
Before we dive into the deep end, let’s just take a second to define the differences between News Trading and Fundamental Analysis, because for a lot of people, they are one and the same, but that couldn’t be further from the truth. Here are some important differences:
So without further ado, let’s take a look at some of the tools:
Fundamental Outlook Score:
Outlook Score is basically a score assigned to the currency based on economic indicators and high-impact news releases such as: central bank speeches, breaking news, political developments, etc… A score between -3 to +3 is assigned to each scheduled events based on its importance, market focus, and surprise factor. For instance, the Non-farm Payroll should have more impact than the New Home Sales figure in the U.S., but if the New Home Sales comes out 100K more than forecast, it should have equal effect on the USD (as compared to NFP) in the long-term.
The Outlook Score is the summary of all of the individual scores assigned to each news releases that matters, and the score is carried over from month to month… this is based on the idea that fundamental sentiments are also carried over from month to month…
The score is modeled after the PMI (Purchasing Manager’s Index) releases, so we start at 50, and any number above 50 is considered positive, or below 50 as negative:
|55 and above||Positive Fundamental Outlook||Up trend|
|50 to 54||Neutral Fundamental Outlook||Neutral Trend|
|49 and below||Negative Fundamental Outlook||Down trend|
Forex News Score Detail:
In the details section, details of the scores assigned to each individual releases are listed. You can click on the ▼(down-arrow) for descriptions on the particular news event, or click on the link to load the 1M chart the default USD cross (EURUSD in this example) at the time of the news release… You can see the first-hand market reaction to the news… Feel free to change the timeframe (from 1M to 60M), and Currency Pair (16 most popular pairs).
Historical Forex News Chart
In the Historical Forex News Chart section, you can see how the market reacted to high impact releases in the past, with a bright green vertical line marking the release time. We are working backward in time to add more historical releases and our goal is to provide historical chart all the way back to 2001, giving you a complete set of data to research and test out your strategy.
The ability to switch to higher time-frames and see longer-term effects of the news is an added bonus, as sometimes fundamental outlook will go against immediate market reaction… but you’ll soon find out that market always falls back in the direction of fundamental outlook.
The last section is the breaking news section where we look at current news headlines that are defining the market for the day, and we dig deeper with our own commentaries. This is equivalent to “What’s Happening Now” in the market, although these headlines may not have a long-term effect on the market, you should always consider the context of the market in your trading decisions.
In conclusion, Fundamental Forex Outlook helps you staying on the right side of the market by giving you the tools you need. You can trade currencies with strong Outlook Score against currencies with weak scores, especially from a longer-term point of view. The advantage of the Outlook Score is that when a currency is going against it, it usually will come back, giving you a golden opportunity to place your longer-term trade based on fundamental trend…