Forex Analysis

Forex analysis is a tool which helps or guide trader to trade efficiently. Forex market is a big market in terms of money and where money is involved one has to be very careful before and after entering into the trade. Forex analysis is a combination of two types of analysis Fundamental Analysis and Technical Analysis.

Fundamental Analysis is based on the study of economic, political, interest rates and other external factors of a country which influence the value of currencies in the financial market. Fundamental analysis is mainly considered for the long term investment purposes. Fundamental analysis depends on the various economic and financial data released by government or non-government agencies of a country monitor the financial stability or financial health of a country. Fundamental analysis is an effective resource to monitor the overall conditions of a country not the exact.

Technical Analysis is the study of price and time of the currency or the currency pair with the help of other different studies to know or analyse the probable price direction. Technical analysis is based on chart patterns of the market. Technical analysis involves study different types of charts and other tools which include trend, range, technical indicators, support and resistance.

Trend: In forex analysis trend is defined as a tendency of the currency pair to move in a particular direction. It is advisable to trade with a trend. Trend is a line drawn by joining two or more data points on the chart.

Range: While doingforex analysis range refers to the area between high price and low price where a currency pair tends to trade between during a given period of time.

Support and Resistance:It very important tool of forex analysis, it is a price level where price tend to stop and reverse. Support is the price level on the chart where the price bounces back in the down moving market and Resistance is the price level on the chart where the price bounces back in the up moving market.

Technical Indicators:This is the most important tool of the forex analysis; technical indicators are the statistical driven studies used on the charts to predict the future price of the currency pair. There are many technical indicators available in the trading platforms. Moving average, MACD, RSI, Bollinger Band etc. are the most widely used technical indicators. These indicators are very easy to draw with a click of a button.

Summary:

All these are the tools which helps trader while doing forex analysis for a forex market or a particular currency pair to trade. Where fundamental analysis help you to understand the external factors which may or may not affect the price or market on the other hand technical analysis helps to create your own strategy to study the market or the price internally by using above mentioned tools under technical analysis.