Page 3 - Module 12 Consolidation

Module 11 – The Fibonacci Science

There is a big difference between ranging and trending days. To successfully trade currencies, you
must be able to detect as early in the morning and as quickly as possible the difference between the
two types of What is Sideways Movement or Consolidation?

It is the time when prices stay within a tight trading range, bouncing between support and resistance
over several hours. When traders see this price behaviour they expect prices to blow out of the
trading range. It is a situation much like a spring being wound. The tighter the spring, the more
energy it will release when sprung.

1. understanding fundamental announcements and their effects on trading
ranges

Fundamental Announcements often affect many markets. A Fundamental Announcement is a report
that affects the opinions of buyers and sellers in the market. It can also be an announcement that
creates fear and/or intense feelings of opportunity, even greed, in a trader that forces them to enter
or exit the market. Either way, these emotions create more buyers and more sellers.

As technical traders, we are not concerned with the report results. We want to learn what reports
affect the market we are trading, and what days and times they will be announced to anticipate
volatility and above average trading ranges.

To figure out the average trading range in the market you are trading you take the daily trading range
day by day for the last 15 days. Add them all up. Then divide them by 15. That total will give you the
average trading range in the market you are trading. The small trading range days usually have no
announcements. Days that have large trading ranges usually have no announcements or reports
that create volatility and trading activity.

2. currency announcements

The following reports can affect currency prices. They occur in all major countries, not only the U.S.
they are any monthly or Quarterly Announcement of the following:

Money Supply Figures
FOMC (or other Central Bank) Reports and Announcements
Export Sales
Weekly and Quarterly Unemployment
Producer Price Index
Housing Starts and Sales
Business Inventories
Consumer Price Index
Wholesale Trade
Personal Income and Earnings
Retail Sales
Consumer Confidence
Gross Domestic Production
T-Bill Auctions
Interest Rate Announcements

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