Right, now we come to one of those age old debates technical analysis versus fundamental analysis. Which one is right? I’ve heard on the thread, there was a guy, stating there, that the news is moving the market. And I hear that a lot, the people say, but it’s the news that moves the market. I’m gonna ask a counter question, and that is: If the news comes out and you take the people away, that they can not trade, say there is a power break, and nobody can trade, no person can trade, is the market going to move? It’s not going to move, the market is moved by people and it’s moved by the decisions of people, and it’s moved by their interpretation and their perception of the news that they have heard.
It’s not so much the news that came out, it’s the people’s interpretation and perception of what they think that news is worth to them, that moves the market. If I buy a stand and I want to build a house in it and I came to know that there’s oil underneath it, then this stand is gonna be much more worth, but other people might not know it, so even if the guy comes and offers me twice as much what the stand next door is, I’m not gonna sell, because I’ve got information that he does not have. And that’s very important to see that the market move is about people making decisions and that’s why I always say to fundamental guy is, but I am not a technical guy, I’m a fundamental guy, I just don’t go into depth studying the fundamentals, but the price action tells me what the fundamentals are. Not really the actual fundamentals, but what do people think and expect of those fundamentals. If people think it’s not good enough, they gonna hammer the currency, like the British pound yesterday. The Interest Rate goes up, but the pound goes down, there was some profit taking, and there is a lot of stuff involved there.
But my point of view is that – by watching the price action, I don’t see, if I look at the graph, if I look at the currency, the E/U for example, I don’t see the graph, I see actions of people, I see emotions of people, I see people making decisions according to news that has been available to them. And people, when good news comes out, they make certain decisions and it sort of runs into a pattern, and that’s why you’ve got those triangles, ascending triangles, descending triangles, that’s why you’ve got flag, that’s why you’ve got consolidation. People are acting within certain limits, because we are limit people. You want boundaries around you, the moment boundaries are off, you don’t know which way to go. So, people like boundaries and when certain patterns are formed within a currency price I see people, the actions of people there. And that tells me what type of action is going to happen when the news really comes out, and they interpreted it. That’s why we anticipate, I’m not predicting anything, I am not predicting the market movement up or down, I’m anticipating it. That’s a difference between the too, anticipation tells me, I’m looking at the price action, I’m looking at the pattern that is busy forming, and when that type of pattern formed I anticipate the price to go up. And I’ll wait for it to happen and I jump on board. That’s why sitting in the playing field, watching it, seeing the pattern form and you know that some 4hour candle is going to break out. And you look for conformation, when that is gonna happen. It’s got nothing to do with fundamental analysis, it’s the action of people based upon fundamentals. And that’s why I say that price action to me is the decisions of people, it’s actions of people, it’s emotions of people, So, I’m seeing people, I’m not seeing the price, because if you see a price you see pips, you see money and that might become your enemy. I see it as actions of people, when there’s no rhythm I know that people are not in harmony, their decisions are not in harmony. So, I’m looking for those harmony movements and that tells me that that market is in motion, and it’s in a certain rhythm and I want to flow with that rhythm.
So, when you look at the share price, or sorry currency price, or any price, even share price – stock market work the same, look at it as decisions of people. If you get acquainted and thoroughly educated in this whole system, it’s like when you do white river rafting. If you ask an expert by just flying with a helicopter above the river, just a flow of the water, different ways it flows, it’s speed, it will tell you what is going on underneath. And he can work out which way to take his little boat the next day, which will be the safest for him. And normally take a video camera, they film it, and then they go and sit, and say there you see some obstacles underneath. There we’ve got to avoid that because there very much sort of acceleration of the water, which is too quick, we cannot get in there. They don’t know what is going on on the other side, they anticipate it by the movement of the water, and that is exactly the same what you’ve got to do with the market. You can anticipate what is coming by the movement that is currently taking place. That is market emotion and that motion is due to the fundamental knowledge that’s been out like Interest Rates that come out. And when it’s out people act upon that information. And that’s technical analysis based upon fundamentals.
Source:
Phillip Nell “4 Hour Strategy (300 + Pips per Month)"
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