The major forces that move the market are supply and demand, and they underline most economic, social, political, and market factors including forex; which is a trader on foreign currency. A successful forex trading depends on a successful forex analysis of supply and demand; this article proves an understanding of forex analysis.
WHAT IS FOREX ANALYSIS
A critical evaluation of the changes in the forex market to determine whether to buy or sell a currency pair at any giving time, this analysis can either be done manually or automatically, they are so many analytical technical in Forex trading and they can be classified into the following groups
Fundamental analysis uses the compound economic parameters of a country to determine its currency value. Parameters like Gross domestic product GDP, unemployment rate, and every other economic parameters released by the country central bank. Such information is normally gotten from news.
Technical analysis is another widely used analytic technique in forex trading, it draws it conclusion from reviewing past and recent movement of a currency price trend, the rationale behind this type of analysis is that history tends to repeat itself. And many traders prefer it due to claim that it gives them objective, and scientific bases for the choice of when to buy a currency.
In trend trading a trader identifies and chooses trade entry and exit base on the upward and downward movement of a currency price trend, traders who uses trend trading normal believe recent trends can give a reliable indication of where price are likely to go upward and where to place a trade entry or exit point.
Range trading is based on the rationale that price can hold at a predictable range for a given period of time, this type of strategy is used mainly for countries with stable and predictable economic. Range trading sometimes uses the same tools as trend trading for trade entry or exit opportunities identification, which includes stochastic, commodity channel index, and relative strength index.
Momentum trading is based on the assumption that strong price movement in a specific direction are likely to point out that a price trend will continue in that particular direction.
Pivot point tries to use average of a previous trading high, low and closing price season to determine resistance and support level, using it to determine the next possible highs and low, and also the intraday market reversals.
In breakout trading a trader tries to use breakout section of a previous defined trading range to determine a trade entry point.
Forex analysis are the bases of forex trading, and a wide variety of analysis strategy is at the disposal of traders, but none gives a guarantee win all the time, so traders are advised to get familiar with numerous technique to increase their trading success.
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