GDP Growth Rate is Improving
Unemployment Rate is Improving
Inflation Rate is Improving
Interest Rate is Flat
Balance of Trade is Flat
Government Debt to GDP is Improving
Opinions and analysis presented here are my own views. Factual information and statistics were sourced from Trading Economics.
Long Term Trend
Review the timeframes beginning with the longest and identify the long term trend. Using rectangles, highlight the trend reversal line’s, on both Fibonacci and Line charts. The trend reversal line should ideally have at least 2 hits if possible. The rectangle height cannot be too large and has a limit of 200 pips.
This rectangle is referred to as the Trend Reversal Zone [TRRZ].
Short Term Trend
Now reduce the timeframe until you see a defined trend that bounces the Long Term TRRZ’s. Overlay a Fibonacci retracement and identify the fib level that was most recently tested, this is known as the Trend Break Point [TRBP].
Using the TRBP as a guide, highlight the short term TRRZ. The rectangle size should be restricted to a maximum of 100 pips.
Micro Term Trend
Now reduce the timeframe again, until you see a defined trend that bounces the Short Term TRRZ’s. Overlay a Fibonacci retracement and identify the fib level that was most recently tested, the TRBP.
Using the TRBP as a guide, highlight the micro term TRRZ. The rectangle size should be restricted to a maximum of 50 pips.
With the chart now containing the overlays that detail the trends, you are better informed to decide appropriate places to enter the market. It is important to restrict entries to the TRRZ’s.
Sentiment Analysis is performed to determine if it is an Acceptable Time to Enter [ACTE]. The sentiment is reported as either:
Determining the sentiment is done by reviewing daily reports and tracking economic indicators.
Useful links are:
Fundamental Analysis is done to determine the Economic Direction of a currency which can be measured on a scale of:
Calculating the direction is done by reviewing the high level indicators of the following categories and reporting the average.
- GDP Growth Rate
- Unemployment Rate
- Inflation Rate
- Interest Rate
- Balance of Trade
- Government Debt to GDP
When reviewing the indicators, take note of the direction over the last twelve months and report as either:
The direction of Inflation Rate is reported three times and Interest Rate is reported twice as these are considered to carry more weight.
The best place to review this data is at Trading Economics. For example, here is the link for United States.