Forex: Trading using Fundamental Analysis?

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I have been trading a mini account as a practice ground for sharpening my skills. And I always wondered why at certain times of the day, there would be a sharp spike in the charts for forex movements. Further observations shows that this coincides with the release of major news regarding finance. Trading the market is all about understanding the psychic of the people who trade in it. And news releases ultimately affects the way people perceive and understand the markets. And with this knowledge, they will then decide whether to buy or to sell. And without fail, everytime there is a major news release, there will always be a majority of sentiments to either go long, or to go short. Now, this is the part that I can never understand. How does the news make people want to enter the market in a certain direction? How do they know to choose that direction to enter the market? I hope to be able to start a series of discussions with regards to the news so that we can share our views on it and better understand the reasoning and the logic behind the market movements. Cos, IMHO, the best combination of a trader, is to have a sound knowledge of the charts, and a good understanding of fundamentals, and you will be able to trade the markets be it a bull, bear or range market condition. This news came out during the night (where I am from) and almost immediately, the charts when in one direction for quite a while. 1530 GMT [Dow Jones] Sterling, which has been one of the best performing G10 currencies of late has been rattled by negative S&P comments on the UK banking system. GBP/USD drops to 1.6137 just off Asia's 1.6135 low and from the day's high of 1.6279 while EUR/GBP bounces off a fresh 5 month low of 0.8603 to 0.8645. Elsewhere EUR/USD is back under pressure after Greece denies asking EU for funding help and U.S. stocks trade lower, impacting on risk appetite. EUR/USD trades one cent off the day's 1.4053 highs and just above the 6 month low of 1.3930 seen in Asia Thursday. (GST) I cannot understand how this news release will spark the sell frenzy (refer to picture). Any gurus here? Do share your views.