Master Forex Trends with the Hull Moving Average & Account Balance

The Hull Moving Average and Current Account Balance: A Dynamic Duo

When most people hear about the Hull Moving Average (HMA) and the current account balance they tend to do this faster than a doughnut at Krispy Kreme. But wait, there’s more, because in the next post we are going to add some liveliness to these two super-juiced indicators. You see, becoming an expert in these elements is like getting a secret pass to the market – a pass that most traders don’t even consider, let alone use because they believe the HMA is just another moving average and the current account is only for economists with spreadsheets longer than Monday meetings.

Hull Moving Average: Why It’s Not Your Grandpa’s Moving Average

So let’s take the truth: the tradition moving average is not a perfect tool at all: it’s lagging, slow, and it often helps you to know what the market did yesterday, not what it is doing today. The Hull Moving Average (HMA), on the other hand, is like trading’s equivalent of a sports car. This moving average is developed by Alan Hull and is considered to be more effective than the other ones as it has lower lag. It is more like moving from dial-up internet connection to fiber-optic internet connection. All of a sudden you are observing the present, not the present after everyone else has already moved.

What makes the HMA work is the computation. It does so, without compromising its ability to react to changes in price. This means less noise and more signal, or more specifically, it means real signals get generated and acted on more quickly – two things that every trader likes. Just think of entering a move at ground zero and actually sticking around until the end of the move as opposed to bailing at the climax like a child in a horror movie. The HMA provides an excellent visual of trends that are so smooth that it almost looks as though they have been cloned but they aren’t.

Current Account Balance: The Unsung Hero of Market Sentiment

Next, you want to discuss the current account balance. This might sound like something that belongs in the ‘boring financial news’ section, but if you know how to use it, it’s pure gold. The current account relates to the balance of trade in goods and services, and net income, and transfers. It is a report card on the financial health of a country and yes, it is much more entertaining than your school grades.

To Forex traders, the current account balance is significant as it offers hints on the need for a country’s currency. A surplus? It suggests there are more dollars coming into the country, which can be good for the currency if you’re a bull. A deficit? It’s usually not a good look—like going to a wedding and wearing flip flops. Knowing the current account gives you the ability to determine how healthy a given currency is in terms of its fundamentals something that is incredibly useful when it comes to the placement of trades.

How to Combine the Hull Moving Average and Current Account Balance for Killer Trades

This is where the fun part comes in – combining the HMA with the current account. The HMA is great because it smooths out the price trends of the securities that we are looking at, but with that price trend, there also needs to be an understanding of the reason why such a price trend exists and this is best understood with the current account. It’s akin to studying a recipe and not just knowing what to do but appreciating the essence of all those ingredients in making it taste good.

Step 1: In this instance, the Hull Moving Average should be used to extract the trend. If the HMA is steadily increasing and prices are above the HMA, the trend is likely positive. Likewise, in situations where the HMA is declining and prices are below the make number, the trend would be negative.

Step 2: Also, verify the current account balance data for the currency of interest. For instance, if you are trading the EUR/USD, if Europe displays a current account surge while the HMA is on a rising trend, you have the fundamentals to support the technical angle. It’s like putting a bet on a royal flush.

Step 3. Look for suitable entry points during the pullbacks. Given that the HMA defines the direction of the trend and current account figures are strong, a good entry point is when there is a small pullback towards the HMA—you should go in at this level to have little risk with tight stops and great risk-reward ratio.

Timing Is Everything

If there’s one thing we know about trading, it’s that timing can mean the difference between a profit and a complete dud. The HMA helps you time those entries, while the current account helps you know if the juice is worth the squeeze. One key insight? Make sure to check for major current account data releases before you trade. If you see a big deficit reported while the HMA shows a strong trend, be cautious—the market could react unpredictably.

What the Pros Say?

According to trading veteran Kathy Lien, “Economic indicators like the current account are crucial because they tell you the story behind the currency’s strength or weakness. Pairing this insight with a technical tool that minimizes lag—like the Hull Moving Average—can provide a significant edge.” That’s exactly the advantage we’re looking for—a blend of fundamentals and fast-moving technicals to give us clarity in chaos.

HMA and Current Account in Action

Picture this: back in 2022, during the pandemic recovery, Australia reported a strong current account surplus due to high commodity prices. The AUD/USD was trending upwards, and the HMA was confirming that trend. Traders who used both pieces of information were able to ride the bullish wave for over 500 pips, while those who only watched price might have missed the context and exited too soon.

By understanding the current account balance, you knew that the fundamentals were solid, and with the HMA confirming the trend technically, the confidence to stay in the trade grew—and so did the profits.

Common Pitfalls and How to Avoid Them

Many traders make the mistake of relying solely on one aspect of trading—either only looking at indicators or only analyzing fundamental data. It’s like trying to bake a cake but only using flour. Sure, you’ll get something, but it’ll be far from delicious. To avoid this pitfall, always cross-check the HMA trend with economic indicators like the current account. If both don’t align, reconsider your entry or reduce your position size.

The Hull Moving Average and the current account balance might seem like an odd couple—one being a high-speed technical tool, the other a fundamental economic indicator. But when you put them together, it’s like pairing fine wine with the perfect cheese—they complement each other in a way that brings out the best.

The HMA helps you get in and out of trends at just the right moments, while the current account tells you whether the underlying fundamentals support the move. Use both, and you’re not just trading blind—you’re trading with purpose, clarity, and an understanding that goes beyond the surface.

So, next time you find yourself staring at a chart, wondering whether to hop on a trend, remember to look at both the technicals and the fundamentals. Let the HMA show you where the market is going, and let the current account balance tell you why it’s headed there. You might just find yourself riding that trend like a pro—and who knows, maybe even enjoying the ride along the way.

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Image Credits: Cover image at the top is AI-generated