Analysis of the foreign exchange market

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Every person who tried to make money on currency trading has no shadow of a doubt that the Forex market is superior in its volatility and turnover to any stock, commodity, commodity or any other exchange. Every day, Forex traders have to monitor a large amount of various data, follow important news and compare information received from different sources with various forecasts, which often also contradict each other.

In order not to drown in a turbulent flow of terabytes of information, to be able to highlight the main thing, investors use fundamental (also called macroeconomic or global) or technical analysis of the foreign exchange market, and most often a certain combination of them. The latter, in turn, depending on the indicators used, is divided into several subspecies, for example, fractal analysis of the foreign exchange market,graphical method, candlestick analysis, Eliot wave theory, etc. Each of them has its own positive points, and often traders use several types of different tools to be more confident in their forecast.

Fundamental is such an analysis of the foreign exchange market, which is based on an assessment of the impact of the release of one or a whole package of macroeconomic news of medium or high importance. Often, people who have just installed a terminal cannot understand what caused such a lull in the market, and then they see a sharp surge, and the price soars to sky-high heights or falls to a monthly low. They think what happened? And it was in Cyprus that accounts were blocked or in the USA the latest report showed a significant increase in unemployment. The market reacts to everything. And therefore, an experienced trader, before starting work, looks into the economic calendar and notes for himself the hours when it is better to wait with opening a position, and when you need to be on the alert and seize the moment. Analysis of the foreign exchange market based on the publication of macroeconomic data is more suitable for investors with an average and long investment period of their funds. Traditionally, such news includes an increase or decrease in the interest rate, the unemployment rate and employment in the US, the GDP report, the confidence index, the balance sheet and some other news. As a rule, they are marked with the highest priority in the calendar, and you should definitely take them into account in your trading system.

Technical is the analysis of the foreign exchange market, which is based on data on the current andpast market conditions. Statistics for a trader plays a very important role, since it allows you to determine the trend, the expected reversal points and the most appropriate moment to conclude a transaction. Japanese candlesticks, chart patterns, technical indicators such as MACD, RSI, stochastics, fractals, Bollinger bands, moving averages with different calculation periods have proven their exceptional usefulness more than once and are successfully used as the core of many trading systems. Trading work such an analysis of the foreign exchange market is generally carried out independently and can trade for days on end. Technical analysis is preferred by short-term players, those who trade on a daily, 15-minute or hourly chart.

As you have already seen, there are many ways to navigate the current state of affairs in the market, and each of them is good in its own way, and there is no single answer to the question of what to choose for yourself. However, there are still some recommendations in this regard. Regardless of which type of analysis will dominate your system, use one or more time-tested indicators, those that are very popular. Ultimately, the price will go where the formed majority of investors will drive it, and therefore it is better to look in the same direction, or in other words, at the same indicator that this majority is guided by.