Fundamental Analysis for the Technical Analyst

Most technical analysts aren’t interested in Fundamental Analysis (FA).


By ignoring some of the very useful information FA affords, traders are cutting themselves off from a potentially valuable aid to their decision-making process.

Contrary to popular belief, using FA to help you trade doesn’t have to mean spending hours poring over boring balance sheets. Quite the contrary!

There are some simple FA techniques, tips and pieces of information that even the most ardent TA follower can quickly get their hands on and benefit from.


When trading shares:

√ Reporting

It’s pretty hard for even an ardent FA follower to stay on top of, and dissect every announcement made by a company. However, it is important to pay attention to basic reporting dates. As a minimum, companies report first-half (1H) and full-year (FY) results, and these can move prices significantly.

The dates of upcoming results releases can be found in our calendar, or on listed companies’ websites. The extra volatility that can flow from these releases can be a reason to either trade or else refrain from trading, immediately before these dates.

√ Dividends

Keep an eye on ex-dividend dates. These have the potential to push shares lower, and can interfere with support lines and other technical aids. These can be found in our calendar, or on a company’s website.

√ Broker reports

A stockbroker’s view of a company can have a huge impact on its share price, and this is especially the case with smaller stocks.


√ Currencies

Currencies, especially the AUDUSD, can play a big part in a company’s fortunes. A rising AUD is good for importers, like retailers, as it makes imports cheaper to purchase (given a stronger AUD).

However, a strong AUD is bad for companies that have large international operations. This is because revenues earnt in another currency reduce in AUD terms, as the AUD strengthens.

Exporters are also hurt by a rising AUD, as this makes their products more expensive, and thus less attractive, to purchasers in other countries.

A weakening AUD has the opposite effect on these types of companies.

√ Keep an eye on commodity prices

Quite often, energy and mining stock prices will be highly correlated with oil and metals prices.

Therefore, when trading energy stocks, keep an eye on your oil charts.

Similarly, when trading mining companies, keep an eye on base metals charts.

Oil, gold and base metals prices can also be important for non-resources stocks. For example, higher oil prices will be bad for transport or airline companies.

√ Inside buying

Fund managers and company directors are often buying and selling large chunks of shares. This activity can, and does, move prices, especially the smaller stocks.



When trading indices:

√ Public Holidays

When trading equities indices, particularly overseas equities indices, you should be aware of any upcoming public holidays, as you may not be able to trade on these days.

This may leave you exposed to large adverse price movements when your market reopens for trading.

√ Major stocks going ex-dividend

When you are long an equity index, and a relatively large company within that index goes ex-dividend, you can expect to see some of the effects of the share price fall feed through to the index.

This is particularly so with capitalization-weighted indices, such as the Hang Seng, where a company like HSBC comprises a very large proportion of the index.

When trading currencies:

√ Keep an eye out for economic data

Key releases include interest-rate announcements, CPI, GDP, PPI, jobs data, confidence and manufacturing data.

These can be found in our calendar. Again, the extra volatility that can accompany these releases can be a reason to either trade or not trade immediately before the releases.

When trading commodities:

√ Focus on the US Dollar

Most commodities are priced in US dollars, so their prices are influenced by movements in USD.

For example, if the USD starts falling, it should be bullish for commodity prices such as crude oil. So when trading oil, keep an eye on the USD against the other major currencies.

By using the above checklist in addition to your TA tools, your understanding of why the markets move the way they do should improve, and this can only increase your chances of becoming a profitable trader.