Technical analysis doesn’t work on its own.
Charts tell us how price is moving. But they don’t tell us why it’s moving.
And in today’s complex macro world, the why matters more than ever.
Think about the latest move in the markets on Friday. If you’re familiar with the previous trade war between the US and China then you will understand that this move may not be the first.
If you’re relying on support/resistance zones, candlestick patterns, or Fibonacci levels without understanding the macro context behind a move you’re trading blind.
What Actually Drives the Markets?
Currencies price movements represent countries economies.
And what moves economies? Interest rates. Growth. Inflation. Policy divergence.
For example:
USD strength in 2022?
The Fed hiked rates aggressively while other central banks lagged.JPY weakness for much of 2023?
The Bank of Japan kept rates pinned at 0% while the rest of the world was tightening.
Here is that data on a chart.
The blue line is the USDJPY. The orange line is the US Federal Funds Rate. The green is the BoJ interest rates.
Fed raising interest rates combined with low interest rates in Japan, caused USDJPY to rise.
Every major trend in FX is rooted in fundamental divergence and only then confirmed by technical structure.
The Golden Combo: Fundamentals + Technicals
When used together, this is how they complement each other:
Fundamentals | Technicals |
Identify long-term bias (buy/sell) | Pinpoint ideal entries and exits |
Explain “why” a move is happening | Show “where” and “when” to act |
Help avoid false breakouts/news traps | Add timing precision to macro views |
The traders that survive long-term are the ones who understand that price follows narrative and narrative is built on macro foundations.