One of the primary problems faced while coming to terms with forex is the market predictions dealing with higher economics. Any individual who is not a market economy grad will find eur usd elliott wave analysis more tangential than the market itself can ever be. But it is true that comprehending theses higher economic jargons is more than necessary for any beginner who has that knack for taking forex trading seriously.
What is eur usd elliott wave analysis?
Let’s divide this term into two sections to make it more comprehensible.
Firstly what needs to be understood is eur usd or EUR/USD in forex terms. This pair on an average constitutes the highest share of a daily market. Commonly known as “euro”, this pair has about 27% of the total currency share and is the most traded pair.
How is Elliott wave analysis forex related?
Elliott wave analysis forex trading has been one of the foremost forms of technical analysis used by traders to anticipate market movement. It has been in use since the 1940’s thanks to Ralph Nelson Elliott’s ingenuity. Even though he was an accountant and not a full-blooded economist, he rightly discovered the linear relationship between human social behaviour principles and market movements.
What elliott wave analysis forex proposes is that the investor psychology fluctuates between layers of optimism and pessimism based on the normal human psyche. These are the mood swings which determine the movement of the market on a trend-specific basis.
Forex wave analysis:
Eur usd elliott wave analysis helps in anticipating the market trend which EUR/USD pair will continue in. Being the most traded pair, proper technical analysis of this pair is of utmost importance.
The same process is repeated with the help of similar forex wave analysis on different pairs. FX is to some extent an organic system where different pairs adversely affect each other, especially if the pairs have a currency in common.
For example, the same parameters are used for usd jpy elliott wave analysis. Differences are obvious but that too only in the form of numbers. Following up from this example, the pairs of EUR/USD and that of USD/JPY have co-related movements and trends simply because these two pairs have a currency in common.
Importance of forex wave analysis:
Pre-determining exact movements is impossible solely because there are numerous variables and even more investors each with their specific behavioural pattern. Analysing market trend thus gains further importance, and the use of such wave theories are indispensable to the serious trader or broker having huge amounts of cash at his disposal.
Eur usd elliott wave analysis has higher variations and fluctuations simply because it is the most liquid currency pair to trade in. Thus forex wave analysis and forecast for this pair have a similar volatility added to it.
However, without the help of these wave theories analysing the market outcome of a pair would be playing with a blindfold. With huge amounts of cash at stake, for a trader dealing with a major currency pair such as EUR/USD, eur usd elliott wave analysis is one of the most important technical analysis forms at hand. Trading should only be done following up on the information provided by wave analysis.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.