Forex analysis

In order to be able to successfully trade, it is essential that you know all three types of analysis perfectly, in order to evaluate the direction and movement of a particular course more accurately. There is no simple answer, which analysis is the best.

You need to get to know three types of analyzes:

-Technical analysis
-Fundamental or fundamental analysis
-Combination of fundamental and technical analysis:

-Fundamental analysis:

Fundamental analysis analyzes the economic behavior of the subject on the market. It does not compare price movements. For example, in trading with shares, traders look at the company’s assets, such as assets, costs or revenues and their liabilities.Fundamental traders use this data to determine the health of the company. If the company’s trend is better than their earnings and their overall economic balance is growing, it can be said that stockholders buy the stock.

Very similarly, it works with Forex Fund Traders. Compared to the health of a particular company, however, traders have to compare the behavior of the entire economy using a particular currency. The trader should be interested in GDP indicators, consumer price indices, interest rate announcements, employment rates, tax and monetary policy, balance of payments, retail, consumer price index, and political events in the countries using the currency. From each indicator, a trend should be created, and by merging these trends, the overall trend (increasing or decreasing in relevance to a certain scale) can be estimated. If you compare the trends of the second pair of currency pair (eg EUR / USD) in the same way, we can reasonably expect future currency pair developments to be relatively successful.

-Technique analysis:

Technical analysis uses the recognition of price level chart patterns in conjunction with the trend in Forex trading. After identifying patterns of behavior, the investor is able to determine the appropriate time to buy a currency pair – predicting an increase or decrease in value. These formulas generally have the form W (double bottom) or triangle. The basis for the technical analysis is the concept of using the levels of support and resistance that marketers use to identify buying or selling opportunities.

Technical analysis helps determine the historical development of currency pairs to predict the future development. Forex has the advantage of being traded 24/7, and so there are many possibilities to get historical data. The advantage of this method is that it does not matter the currency pair, but the comparison of chart patterns that tend to look similar. The method of technical analysis is easier to orientate in the immeasurable amount of investment in currency pairs, and at the same time determine the direction in which to invest.

In most cases, people traded in the most common currency pairs – EUR / USD, GBP / USD, USD / JPY and USD / CHF – have a technical analysis that show a fairly clear trend.

-Combination of fundamental and technical analysis:

Deciding which of these methods is better is for merchants. However, in general, eliminating as many risks as possible from trading on Forex, it is best to incorporate as much information as possible into your investment decisions.

Fundamental analysis will give you an insight into the development of currency pairs for a longer period of time (let’s say 1 year view). The overall trend will be less prone to change, and the forecast and the success of the investment will be greater. Technical analysis contains recent information and is therefore suitable for short-term investment decisions. It follows from the fundamental analysis that it is appropriate to determine the currency pair with which we want to trade and to determine its development. By technical analysis, we will determine the appropriate time to start the investment, and later time to close it. Given that both theories are generally recognized, market thinking behaves according to these theories and hence the development of currency pairs on Forex.

Often, traders focus on only one strategy and analysis, mostly technical ones. However, forgetting that the publication of important results in some area can completely eliminate all the efforts you have put into the technical analysis, as technical speculation breaks down on important events.

Regardless of whether you are new to forex trading or have been doing this for a long time, it’s now a good time to get to know all three analyzes that I will only present on this page as an overview but give you some important sources , which should be monitored and from which you can learn a lot.

All three analyzes are the easiest to imagine as a chair with three legs. If only one of chair legs is damaged, the chair will not be stable and you will fall. Only the drop in trading will probably be much more expensive for your finance.

Leave a Reply

Your email address will not be published.

This website uses cookies. By continuing to browsing the site, you agree to our use of cookies.