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Forex Analysis

Forex Analysis

Daily Analysis and Reports

One of the basic principles of Forex analysis is to follow the historical price movement pattern and predict the variation in prices in the future. Since the Forex market operates 24 hours a day, it tends to produce large amount of data that can be used to measure the trend in future prices. Therefore, it is ideal for traders to use technical tools, such as trends, graphs and indicators to predict the market trends.

It is important to note that, in general, the technical analysis for currencies is the same regardless of the asset being monitored. There are hundreds of books dedicated to that area of study, but in the tutorial we will address the basics of technical analysis and see why it is so popular in Forex trading.

This article will focus on technical aspects related to the Forex market and methods of technical analysis.

Technical Analysis That Excludes Discrepancies In Forex Market

There are many major dealers in Forex market such as hedge funds and big banks, all of them have sophisticated computer systems that monitor and discrepancies between different pairs constantly. Due to these programs, it is rare to see any major discrepancy for a period longer than a few seconds. Many traders in the Forex market use technical analysis because they assume that all factors that affect the variation in price including economic, political, social and psychological factors have already established its impact on the current exchange rate in the market.

Trend or Range

One of the greatest goals of currency traders in Forex market analysis is to determine whether the pair will trend in a certain direction, or it will move sideways and remains within a specific range. The most common method for determining these properties is through drawing trend lines that connect the historical levels that have prevented the pair from going to rate higher or lower. Technical traders using support and resistance levels to determine whether there was or there was not a certain direction, and if any, they can determine whether to continue or not, and it represents a timely opportunity for trading in this currency pair, whether buying or selling the pair according to the nature of the trend.

In general, major pairs like EUR/USD, USD/JPY, USD/CHF, GBP/USD show the greatest characteristics of the direction, while pairs that have historically shown more likely to become static in a specific range do not involve US Dollar. Majority of traders in Forex market are relying on the combination of technical analysis and the recommendations of fundamental analysis to determine trends of pairs and find opportunities of potential profit. These analyses allow them to determine the entry and exit levels to achieve higher levels of profits or minimize losses to the minimum. 

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.