In our previous videos, we’ve learned the importance of tracking the big market cycles and how fundamental and economic forces drive those movements in this video. We’re going to look at the top three economic indicators to look out for. In the past, only experienced professionals and economists received this data in a timely fashion, but in the Internet age everyone has access to dozens of economic surveys and indicators every week.

This data can be divided into three main groups: interest rate and monetary policy, employment and jobs data, and consumption and production data.

Now, keep in mind most of this data is based on the US economy since it’s the biggest financial powerhouse that moves global markets.

So, first let’s look at interest rate and monetary policy. For the US, the Federal Open Market Committee or FOMC makes scheduled announcements 8 times a year regarding interest rate or monetary policy. This can have a major impact on the markets because it affects the cost of borrowing and the money supply in the market. Other economies such as the eurozone, China, Australia, Japan and Switzerland have their own scheduled announcements where they set their interest rate and monetary policy.

Next, employment and jobs data. This data is very important because job creation is a leading indicator of consumer spending, which accounts for a majority of overall economic activity. The most important figure is the non-farm payroll which accounts for approximately 80% of the workers who produce the entire gross domestic product of the United States. This vital piece of economic data is released monthly usually on the first Friday after the month ends. The combination of importance and earliness makes for hefty market impacts. Other indicators include the employee cost index or ECI employment situation report and weekly jobless claims report.

Finally, there’s consumption and production data. There are various reports that measure different aspects of consumption and production, so it’s up to the savvy investor to piece it all together. Some examples include the Gross Domestic Product or GDP, Purchasing Managers Index or PMI, Philly Fed Report, Consumer Confidence Index, Producer Price Index, Consumer Price Index and the existing home sales report and housing starts. In general, the key is to look out for the kind of news that’s relevant to the current market climate.

For example, when the stock market has been bullish for many years and interest rates are really low, astute investors will keep their eyes peeled for any indication about interest rate increases as these will have a major impact on the market.

So remember, do your research and always make informed investment decisions.

So far, we’ve covered the importance of market timing and the need to trade according to the current trend. But when exactly should you be buying or selling a security? This brings us to the topic of support and resistance zones.

Support and resistance zones are like invisible lines on a price chart which prices and traders react to. They signal a great opportunity to either enter or exit a trade. These zones usually correspond with the pattern by which a particular security has moved in the past. For instance, let’s say a stock reaches a certain price level before declining, it goes down for about a year before hitting its bottom and turning back up again.

The next time that stock approaches, the price at which it first began to decline, some investors will start to sell it off, anticipating that it will decline once again. This is how a resistance zone is created. On the other hand, when that stock approaches the price at which at last turned around, many investors will step in and buy it, creating a support zone. Securities sit in these zones temporarily, while buyers and sellers try to figure out whether to jump in or jump out of the market. The key is to watch carefully how prices react in the support or resistance zone because eventually, one of two things will happen.

The zone will either hold and the price will reverse direction or the security will break through and continue on its trajectory. It’s important to note that breakthroughs have the tendency to recalibrate a security support and resistance zones. For example, often times when a security breaks through a resistance zone that same level becomes its support zone during the next cycle. That’s because of all the investors who missed the chance to benefit last time around and are looking to either buy the security for cheap or sell it before it declines.

As a trader, it’s important to learn how to identify the support and resistance zones for a particular security once you’ve figured out where those zones are, you should then make your buying and selling decisions near those zones. That will provide you with a market edge, allowing you to achieve greater success over the short and long term.