The are two ways to analyze market movements forecasting: fundamental and technical analysis
Fundamental Analysis:
Fundamental analysis is very useful to determine trends in the currency pairs. By focusing on long-term economic factors that affect the country, fundamental analysis to predict long-term trends.
Exmple: EUR/USD
When the dollar weakens, the EUR/USD will go up. If the USD recovers the strong foreign demand will make the EUR/USD lower. If you think the U.S economy will be weaker and lower U.S dollar (U.S). You can buy the EUR and selling the USD. If you think that there will be increasing foreign demand for U.S. financial intruments such as equities and treasury to benefit the united states dollar. you can sell EUR and buy the USD because you expect the euro will lose value against the dollar.
Technical Analysis:
Logis behind technical analysis is to find a trend when it began to form, which allows traders to follow the trend until it ends. Foreign exchange market is usually composed of trends and therefore a place where technical analyis can be effective.
Technical Analysis offers many different ways for traders to analyze market information.
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