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It’s Henry Liu here.

Before we get into this amazing strategy, I just want to make sure
that we are on the same page. The strategy that I’m about to share
with you is a unique trading method. It took many months of
diligently monitoring the market to identify this opportunity so
needless to say, it does not happen every day, or every other week for that matter.

What’s important to realize is that this “type” of opportunity does happen at least a few
times a year, which means if you are patient and wait for the right opportunity to come
to you, you’ll be able to capitalize on it. At the end of this report, I’ll prove it to you by
pointing out a few examples of this type of trades do happen from time to time.

Lastly, let me just remind you that Forex trading is risky in nature and you should not
continue with this report unless you’ve read and agreed to the terms and conditions
(including the CFTC Disclaimer, Earning’s Disclaimer, and Risk Disclaimer) listed on my
site, http://www.forexnewstradingacademy.com/earnings-disclaimer/

Now, without further ado, let’s dive right in!

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Fundamental Analysis Strategy – Special Report
Case Study: $1490 to $18647
Time Period – October 17, 2012 to February 2, 2013

Fundamental Analysis
Before we dive into the strategy, let’s review some of the basics:

Market is driven by speculation. Fundamental events change speculations, thus if we


want to understand the market, we need to pay attention to fundamental events…

Without getting too much into


Fundamental Analysis, key focuses are
Central Bank and Monetary Policy when
it comes to market direction. Forget
about CPI, PMI, Retail Sales, or any other
economic acronyms; if you just focus on
Central Banks and their respective
monetary policies, you’ll be right on the
money 9 out of 10 times.

Remember when it comes to trading currencies, you are either right or wrong, since you
can only go in one of two directions: BUY or SELL. If you can identify market direction,

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you’ve already won 50% of the battle. Think about it again, just by picking the right
direction in your trading, your trading result can improve significantly overnight.

Of course, I’m not discounting all other important aspects to trading, I’m sure they are
all important, but with little patience and practice, there should be no reason why you
couldn’t achieve success in Forex, if you can successfully pick the right direction.

Trend Changing Event (TCE)


The focus of this special report is Trend Changing Event. TCE by definition is a type of
market event that has the potential of changing market trend. Almost all TCEs are
related to central banks or its monetary policies, or at least have something to do with
them. Below is a brief overview:

Trend Changing Event (TCE)

TCEs are high impact news releases or combination of releases that change the long,
medium, and short term trends of a currency. Market is usually taken by surprise when
such event takes place and the effects are usually long-lasting.

A sudden change in monetary policy could also be classified as a TCE; however, not all
monetary policy surprises are TCEs.

TCE doesn’t really occur often, but you can usually spot it in the chart. Here’s a chart of
USDJPY that pinpoints a TCE event.

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In this particular case, the effects of TCE moved USDJPY from 78.50 to 104.00 in just
under a few months, for a total of 2600+ pips!

Imagine if you were to get advanced notices when USDJPY was trading around 80.00
that in a few months it would be above 100.00, how much is this information worth to
you?

Let’s take a step further and expand our minds here a little, because aside from the
USDJPY, EURJPY moved over 3000 pips, GBPJPY also moved over 3000, and not
mentioning AUDJPY moved over 2600… All of these pairs capitalized on JPY weakness.

Here is what I’ve done during that period of time after identifying this TCE:

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Final Results: I ended up with over $10,000 of closed profits (Balance), but the real
equity was $18,647 since I had a floating profit of $6,496.77 plus my initial account
balance of around $1,490. That’s 1149% of return from the starting balance, all because
of the TCE.

To understand how I was able to identify this opportunity, let’s look at some
background information.

Yen: Story Of Crisis And Hope


Background:

JPY had been strengthening during the global recession from 2007 ~ 2012. This is due to
the safe-haven status of the Japanese Yen as when there are financial or geopolitical
tensions, traders seek the safety of safe-haven currencies such as USD, JPY, and CHF.

During the same period of time, the US Federal Reserve launched one Quantitative
Easing program after another which effectively drove down the value of USD. The Swiss
National Bank did the same thing by setting a peg for the EURCHF pair, which effectively
created unlimited supply of CHF. So JPY became the only free traded safe-haven
currency, aside from few intervention attempts every now and then, most traders were
LONG on the JPY as the currency appreciated over 4500 pips against USD during the
same period up to last quarter of 2012.

Challenge:

The Japanese economy was facing many challenges. The rise in JPY currency added
more pressure to its economy as Japanese companies lost their competitiveness in the
global market due to higher cost from having a strong currency as the JPY appreciated
more than 25% in the 5 year period. It was also during this same period that China
overtook Japan as the second largest economy in the world.

Furthermore, Japanese economy has been facing deflation for a decade. The effects of
deflation depress desires for households to consume, and companies to invest, which in

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turn affect productivity growth and wages declines… in short, deflation combined with
overvalued JPY is a recipe for the perfect storm.

Opportunity:

The story first broke back in early


August of 2012 when Japan PM
Noda’s DPJ party agreed to dissolve
the Lower House of Representatives
in order to reach an agreement with
the LDP (opposition) party to increase
consumption tax. Although at the
time there was no date set, market
began to suspect that a major political
event was on the rise since the
dissolution of the houses will lead to an early election (Prime Ministers are determined
by the members of both Upper and Lower Houses (DIET), so in essence this could
change the entire political arena).

In the same month of August, Noda managed to pass the tax bill along with support of
oppositions, but he immediately went back on his promise of an early election by
delaying the timeline to dissolve the Lower House. This obviously did not sit well with
the LDP party (opposition) and they retaliated with a censure motion in late August; to
the surprise of many, the motion was passed and the result made Noda as the 3rd Prime
Minister ever since the war to be censured, and the motion also effectively shut down
any cooperation from the opposition until the next DIET session in September.

This starts to get very interesting as now, we have a government that’s on the brink of
shutdown as without cooperation from lawmakers, there were be no enactment of the
previously passed law, or simply put, Japanese government will run out of money in the
next few months (October?) unless they get their acts together. In essence, this is a
train wreck waiting to happen, as all eyes are now on how Noda will solve this crisis…

Fast forward to October of 2012, after surviving his own party’s nomination as Prime
Minister, Noda was facing increasing pressure from the opposition to keep his promise
and hold an early general election.

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Things turned from bad to worse when the
former Prime Minister Shinzo Abe decided
to return to the opposing party, LDP, as the
next candidate for Prime Minister, and
along with a coalition of another party, they
threaten to shut down any budget bills for
the next fiscal year until they get what they
want. This new development begins to pick
up momentum as Abe has been very open
with his view on economic reforms, weaker JPY, and monetary stimulus. If he were to
take office as the PM, he would do whatever it takes to drive down the value of JPY
while reaching the 2% inflation target. Remember that Japan was still facing low
inflation and sometimes deflation at the time, so this was like a light at the end of the
tunnel as traders were now seeing the potential for JPY to weaken if Abe were to win
the election… Of course, it is still too early to say, but at this time big monies were
already positioning for this outcome.

On November 16, 2012 Noda finally gave in and agreed to dissolve the Lower House and
hold a general election on December 16, 2012. This turned out to be the confirmation
we needed and the first step to secure JPY long-term weakness. Market was trading
USDJPY pair between 79.00 ~ 82.00 at the time and this was the TCE that we’ve been
waiting for.

From this point on and all the way to December, market continued to push LONG on
USDJPY as we reached 86.50 by end of the year and 91.70 by end of January 2013. If
you just bought EURJPY, USDJPY, AUDJPY, or any JPY crosses with your eyes closed
(that’s what I did), you’ll be making at least 100% return on your account.

Market continued to push further after Abe won the election in December. Abe kept his
word and launched a series of plans to drive JPY weaker, and because of the coalition
that LDP party has with the Komeito party, they had the majority of the Houses and
were able to pass any law that they wanted… On top of that, since Abe has the power
to appoint the next BOJ (Bank of Japan) governor (and he did appoint a new BOJ
governor), it’s no surprise JPY continued to tumble and by May of 2013, USDJPY went to
as high as the 104.00s.

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Conclusion:

By understanding fundamentals and the reasons behind Japanese Yen weakness,


anyone could capitalize on this TCE and make tons of profits. My initial target for the
JPY was around 102.00 areas, and even at that, market managed to beat my target by
200 pips. I would go as far as saying that sometimes you don’t need to scalp the market
and fight for scrap leftovers by your brokers. You could capitalize on moves like this
that happens at least a few times a year. As long as you trade in the right direction,
which is fundamental analysis 101, you can’t really go wrong.

Upcoming TCEs
Having seen TCE in action with the Japanese Yen, here’s another TCE currently in
development in the U.S. and it is my opinion that the impact of this event will surpass
the example above.

Without getting too much into the details, we know that Federal Reserve Chairman
Bernanke has been talking about “Tapering” or reducing their monthly asset purchases.
This is at the heart of the monetary policy and will change the trend of USD for years to
come. I believe the next TCE is coming and as soon as it hits the market, I expect to see
USD gaining across the board, leading with USDJPY hitting new highs (115 ~ 120?). This
event will probably last for a few years, and I’m sure it’ll be another opportunity to
generate tons of returns that should make what I did with the Japanese TCE look like
child’s play.

Are you interested in getting in on the move? If you are, join my FNTA Trade room
today, where I share my analysis every day during the US session and recommend
trading opportunities where you can capitalize on moves like this.

Join me today at – http://www.forexnewstradingacademy.com/fnta-signup/

Thank you and I’ll see you inside.

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