We like to say that a really juicy piece of fundamental information will trump the technicals every time. Technicals are the quantification of what traders think and believe, and what they think and believe is shaped by the fundamentals. Fundamentals include economic news, institutional arrangements, business conditions, and the occasional dash of politics.
But is it really true that fundamentals trump technicals? The forex market has become so enamored of technical analysis that today we have to question whether the fundamentals actually do rule the market. Sometimes it seems traders are perverse in their response to “real” events, interpreting them to suit the chart instead of adjusting the chart to reflect economic reality.
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