Forex Analysis: Technical and Fundamental Analysis with Forecasts
Forex Market Analysis
With the growing popularity of trading currency pairs on the forex market, various methods of determining the direction of the movement have appeared. Today forex market analysis is an essential part of a trader's work - let's find out how to analyze and what a beginner should pay more attention to as a trader of currency pairs and other instruments.
The essence and types of analytics
Traders have realized that in order to start trading profitably, you have to make a thorough analysis of the forex market. When a beginner learns about Forex he does not have a clue how to make forex forecasts, so he may make a lot of mistakes which can lead to losses. In fact a beginner does not even understand how a currency pair moves, what leads to its movement and, which is more important, on what basis making Forex forecasts should be based. But there are certain correlations on the market. For this reason it is worth to divide the analytics by types: technical, fundamental, fractal, candlestick, wave analysis.
Technical analysis of the forex market
Technical analysis of the forex market is based primarily on the use of technical indicators, horizontal and trend lines according to which the price will be examined and on which the conclusion about the possible direction of the currency pair in the future will be drawn.
Fundamental analysis of the forex market
It is based on the economic indicators that are published daily and can characterize the economic and political situation in the countries. The difficulty of this analysis is that the data on different countries comes out every day and it affects the national currency, which in turn changes its value and the price of the currency pair fluctuates. But if you use the fundamental approach to forecasting you can avoid entering the market when there are abrupt movements or you can predict how a currency pair will behave in one way or another.
Candlestick Approach in Analytics
It is a type of technical analysis where candlestick bodies and shadows are used to predict future behavior of a currency pair. Originally it was only a daily chart, but later candlestick studies were extended to smaller timeframes. If you hover over each candlestick, you can see the Open, Close, High, Low, and based on these data and build strategies and write EAs.
Fractal and Wave Approach
It is a kind of analytical methods based on the candlestick analysis, but with a different approach. For example, the Fractal approach implies studying the fractals which are formed by examining more than 5 candlesticks. Strategies are usually based on a fractal breakthrough and in combination with other market research methods. The wave approach is based on the cyclic pattern of price movements. It is based on 5 waves in one direction, i.e. along the trend and 3 waves in the other direction as a correction. This approach was pioneered by trader Elliott.
So, we can now draw the most important conclusion - a correct forex currency forecast is the key to success. But you should not pay attention only to one type of forecasts, combine them, try to combine them into a strategy to be applied every day and then you will succeed! Good luck!