IEXS Forex Example of Fundamental Impact of Technical Warning

Most of the significant technical changes triggered by fundamentals are actually foreshadowed on the technical charts, and whether they can be detected depends on whether investors have really paid attentionIEXSForex traders need to pay attention to the key points.

At 20:45 on December 3, Beijing time, the European Central Bank announced the interest rate decision, and at 20:41 earlier, the Financial Times announced that the European Central Bank would maintain interest rates unchanged. Four minutes later, the European Central Bank announced a cut in deposit rates. Although the Financial Times later clarified that the previous was a misrepresentation, the result of the euro's sharp rise has not changed: the euro strengthened across the board that day, and the euro/dollar fluctuated by 464 points during the day, which is relatively rare.

From the perspective of a comprehensive review of this incident and its details, it is necessary to emphasize the following three points.

First of all, the overall rise of the euro did not actually start at 20:41.

The one-minute chart of the day shows that the euro has started to rise across the board as early as 20:37 Beijing time.

Secondly, after the Financial Times published the news at 20:41, the EUR/USD fell for 4 consecutive minutes on the 1-minute chart (one of which was sideways) to 20:44:59.

When the European Central Bank's interest rate decision was announced at 20:45, the EUR/USD instead hit the low of the day; then in the 1 minute, it rose continuously, and then hit the high of the day. 20:45 EUR/USD fluctuated by 173 points, which is also rare.

On that day, the EUR/USD has established an upward trend since then, and even the speech of the European Central Bank President at 21:30 failed to change the upward trend of the EUR/USD.

As of 20:45, even if the Financial Times news caused the euro to rise, the market also allowed the euro to fall again through the mechanism of "buy rumors and sell facts", eliminating the previous rise in the euro caused by rumors.

So, inexplicably, with the effects of misinformation having been eliminated by 20:45, what was driving the euro's sharp rise?

The author believes that the technical aspects have actually foreseen the possibility of a rise in the euro.

Although no one could have foreseen a strong rally in the euro/dollar pair, the possibility of a "rebound" is obvious. From a technical point of view, the following three points are worth noting.

First, the futures market euro short positions reached a recent record high.

Second, the euro is close to where it was near this year's lows.

The most important thing is that although the EUR/USD has been hitting new lows for several months for several weeks, the gap between the new low and the previous low is very small, and it rebounds quickly after each new low. In fact, many technical changes caused by fundamental events have been given technical warnings long before the news appeared. For example, the volatility of the class A share market this year.

Investors with a little investment experience can avoid the risk of a sharp pullback as long as they see two issues.

One is that groups with no concept of investing blindly enter the market because they see others making money. This is a classic fermentation of the money-making effect. This phenomenon is similar to the market crash of 1929.

In July 1927, Joseph Kennedy (President Kennedy's father) was on his way to Wall Street when he met a shoeshine boy who enthusiastically told him about the stock market. Kennedy sold all his shares. "When the shoeshine boy knows as much about the stock market as I do, it's time to get out of the stock market," he explained.

Second, technically, this year's market correction did not come overnight, and the decline was gradual. Looking back at the market chart, you will find that the market first formed a small head by falling below 5000 points, and then fell below 4431.56 points to form a medium-term head. If you can leave the market in time near 4430 points, you will not suffer major losses.

The author believes that most of the major technical changes triggered by fundamentals have actually given early warnings on the technical front, and whether they can be detected depends on whether investors have really made efforts. This is particularly evident in IEXS foreign exchange trading.