Discussing the article: "Combine Fundamental And Technical Analysis Strategies in MQL5 For Beginners"
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Check out the new article: Combine Fundamental And Technical Analysis Strategies in MQL5 For Beginners.
In this article, we will discuss how to integrate trend following and fundamental principles seamlessly into one Expert Advisors to build a strategy that is more robust. This article will demonstrate how easy it is for anyone to get up and running building customized trading algorithms using MQL5.
Fundamental analysis is rooted in an understanding of how markets operate. In our discussion, we will focus on currency pairs and build our trading algorithm to leverage our understanding of the foreign exchange markets and its major participants.
Fig 1: An example of fundamental analysis on the AUDJPY pair.
Fundamental traders often discuss support and resistance, although there are no definitive definitions for these concepts. I would like to offer one possible interpretation from a fundamental perspective.
When we look at the exchange rate between two currencies, it's easy to forget the real-world implications. For example, if the USDJPY chart is rising, it means the Japanese Yen is depreciating against the Dollar. Since 90% of the world's commodities are priced in Dollars, a rising chart indicates that Japan's exports are fetching less money abroad.
If the exchange rate continues to rise without bounds, the Japanese government would face significant challenges. Their exports would be worth very little, leading to economic strain and a decline in living standards. Families might struggle to afford necessities, and the country could face hyperinflation and dire economic conditions.
To prevent such outcomes, it is crucial for Japan's well-being that the exchange rate between the Yen and the US Dollar remains within a tolerable range. When the exchange rate becomes too high, the Japanese government is incentivized to intervene in the foreign exchange markets to protect their economy. Conversely, when the exchange rate is too low, the US government might provide support to maintain balance. This is how support and resistance can be interpreted from a fundamental perspective.
Author: Gamuchirai Zororo Ndawana