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Forex Analysis - Technical Analysis - Fundamental Analysis - Page 3

What is Forex Forecasting?

At Forex Forecasting means predicting current and future market trends by utilizing existing data and various facts. Being an analyst, one should rely on both fundamental and technical statistics in order to guess the directions of the economy, the stock market, and individual securities.

The Forex Forecast is a currency sentiment tool that highlights our selected experts’ near and medium term mood and calculates trends according to Friday’s 15.00 GMT price. This Forex survey is not to be taken as signal or as final target, but as an exchange rates heat map of where feeling and expectations are going.

This article has been ready with the purpose of helping you to learn the basic Forex forecasting techniques, and how to apply them in your Forex Trading.

Basic Forex Forecast Methods :

This article provides insight into the two major methods of analysis used to forecast the activities of the Forex market. Technical analysis and fundamental analysis be different very much, but both can be useful forecast tools for the Forex trader. They have the same objective- to predict a price or movement. The technician studies the effect while the fundamentalist studies the cause of market movement. Many successful traders combine a combination of both approaches for superior results.

Technical analysis :

Technical analysis is a method of predicting price movements and future market trends by studying chart of past market act. Technical analysis is concerned with what has really happened in the market, rather than what should occur and takes into account the price of instruments and the volume of trading, and creates charts from that data to use as the main tool. One major benefit of technical analysis is that experienced analysts can follow many markets and market instruments at the same time.

Technical analysis is built on three essential principles:

  1. Market action discounts the whole thing! This means that the actual price is a indication of everything that is known to the market that could affect it, for example, supply and demand, political factors and market sentiment. However, the pure technical analyst is only worried with price movements, not with the reasons for any changes.
  2. Prices move in trends Technical analysis is used to recognize patterns of market behavior that have long been recognized as important. For many given patterns there is a high prospect that they will produce the predictable results. Also, there are recognized patterns that repeat themselves on a consisted basis.
  3. History repeats itself Forex chart patterns have been familiar and categorized for over 100 years and the manner in which many patterns are repeated leads to the conclusion that human psychology changes little over time. Forex charts are based on market action concerning price. There are five categories in Forex technical analysis theory :

 Indicators :

  • Number theory (Fibonacci numbers, Gann numbers)
  • Waves (Elliott wave theory)
  • Gaps (high-low, open-closing)
  • Trends (following moving average).

The Forex Market

The forex market is the largest financial market in the world, particularly with a daily volume of $1.5 trillion. The Forex market has no physical location and no central exchange. Instead, the foreign exchange market operates through a huge electronic network of banks, corporations, and individuals trading one currency for another.

Methods of Forecasting :

The first method used by Forex forecasters is technical analysis. While these methods differ, each on can help Forex traders to understand how rates are moving the trade of a certain currency. Experienced traders and brokers who are well up to date with each method can use a mixture of the two with great competence.

There are some basic principles which are applied in order to make projections. These principles are based on the activity in the Forex market in relation to current events, trends in the movements within prices, and past Forex history. At the time of each market action, almost the whole thing important from supply and demand, current politics, and the current state of the market in question is taken into consideration. It is widely believed that Forex prices are a direct expression of events currently taking place in the world.

There are also several charts that should be taken into serious consideration when forecasting the Forex market through technical analysis. Five categories which must be looked at are : Indicators- Waves, Trends, Gaps, and number theory. These charts can be difficult and whilst novice traders may find them not easy to follow – most professional Forex brokers will have a good understanding of these charts, and will provide their clients with well-informed advice about foreign exchange trading.

When an individual trader uses them together, it can provide them with useful and vital information about the movement of currency trends. Learning how to make Forex predictions is hard and takes time, but having that extra knowledge will prove to be invaluable in your Forex career.

Conclusion :

We would like to show you how you can forecast the forex market by exemplifying forex forecasting methods. It is quite a challenging task to generate a forecast of good quality, but we will describe the methods of doing so based on level of high proficiency. This article will provide traders with a detailed understanding of Forex Forecasts, including an overview of the main methods of forecasting that exist, the different ways of forecasting currency changes, such as Purchasing Power Parity, Relative Economic Strength, and much, much more. We have discussed Forex trading forecasting and the main techniques to used by professional traders. We have also exemplified the methods of forecasting the direction of exchange rates.

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