Forex Market Analysis - Types of analysis

There are several ways to analyze the Forex market. Although there are several methods to analyze the market, the sole purpose of all forms of analysis is the same, ie, to know good business opportunities within the market. When broadly classified, there are three main forms of analysis of the Forex market. They are fundamental analysis, technical analysis and sentiment analysis. Let's look at these types of analyzes in detail.

Fundamental analysis

In finance, fundamental analysis is the analysis of the financial statements of the company (usually to analyze the assets, liabilities and earnings of the company). This definition seems to be very valid in the case of the stock market. But when the futures markets and currency analyzes, fundamental analysis is to analyze the general state of the economy. As a forex trader, one basically consider factors such as interest rates, production, employment, GDP, housing, manufacturing and many more. In short, fundamental analysis in the foreign exchange market it is trying to find out if the economy is working well because the value of the currency of the country is directly affected by economic conditions in the country.

Fundamental analysis studies the political, economic, socio-cultural and physical environmental factors that have an impact on the Forex market. These factors are important because the market really reacts to this information generated by these factors. Long-term trends in markets and large movements are observed due to fundamental factors behind it. Fundamental reports act as a catalyst in the market that creates high volatility. Economic forces, economic indicators, fundamental announcements, the geopolitical environment and human psychology are primarily responsible for boosting prices.

As we speak of fundamental analysis, we note that the market is moving economic indicators. Economic indicators can have a big impact on the currency market. Knowing how to use that information may increase the profitability of traders. These economic indicators are published in a specific time interval. One can know the dates and time of the release of economic indicators looking at economic calendars that are available free online. Now let's look at some of the most important economic indicators market.

Interest rate decision

Interest rates are usually adjusted by the central banks of countries. The main reason for setting the interest rate is to control inflation. Inflation is controlled by controlling the money supply in the economy. If inflation is high, the central bank increases interest rates, which will gradually decrease the money supply in the economy because rising interest rates means that the loan is costly and deposits become attractive. This will decrease the money supply in the economy by making the value of the currency is stronger and inflation down.

Employment situation report

Employment data are generally published by the Labor Department. It is the country's employment situations. These are the data relating to employment situations.

The unemployment rate:

The unemployment rate reflects the number of unemployed people expressed in percentage terms. The unemployment rate has a great impact on the economy and also in its currency. The high rate of employment is always favorable in the economy, while low employment rates are unfavorable situations. And the value of the currency also decreases as the labor market decreases.

Nonfarm payroll

The Forex market tends to be highly volatile during the release of NFP data. NFPs are the statistics published by the Bureau of Labor Statistics US. UU. Whose aim is to represent the total number of paid US workers of any business, excluding the following workers:

-General government workers

-private household employees

-workers of non-profit organizations that provide assistance to individuals

agricultural employees

average workweek

These data represent the average hours worked per week by employees in non-agricultural section.

Average hourly earnings

These data represent the average rates of hourly earnings of employees working in major industries.

Consumer price index (CPI)

The CPI is the main tool to meet the inflation of a particular country. Inflation is an increase in the general price level. Generally speaking, when the CPI report is positive, the country's currency reacts bullish and vice versa.

Gross Domestic Product (GDP)

GDP is above the other economic indicators. GDP reflects the aggregate total economic output within a country during a specific period of time measure. GDP includes personal consumption, government spending, private consumption and foreign trade balance. GDP extremely covers the wide area of ​​the economy, so it is an indicator that says a lot about the health of the economy. Positive gross domestic product launches are good for forex traders as a good GPD means a stronger economy.

Fundamental analysis can be very useful for long-term investors. A day trader can find pretty useless fundamental analysis. Fundamental analysis helps to have a broader view of a coin or where the currency in the long term targets image. Fundamental analysis works best for operators position.

Technical analysis

Technical analysis is another great way of analysis. Technical analysis is the study of the action of preciodel market itself rather than goods. The coach believes that "the market is always right". In other words, instead of trying to consider all the factors that influence the demand for assets, the cost of the assets and the supply curve to determine the price of a security, the coach believes that all these factors already taken into account in the curves of supply and demand and therefore the price of security. The price of the financial security is also influenced by psychological factors. Greed, fear, cognitive bias, misinformation, expectations and other factors enter into the price of a security, which probably makes the analysis of the factors almost impossible.

Although it is thought that technical analysis is an ancient method of analysis of markets and prices, its history has been poorly recorded. We have recorded evidence of technical analysis used in antiquity, but it is conceivable that technical analysis, somehow, has been used in the distant past in markets free trade.

Principles of technical analysis

A fundamental tenet of technical analysis is that the market price reflects all necessary information; therefore, its analysis analyzes the history of pattern of trade security rather than external factors such as economic, fundamental and other events. Therefore, it is likely that the price action is repeated because investors collectively tend toward a structured behavior, so that technical analysis focuses on identifiable trends and conditions. The following are the basic principles of technical analysis.

a) The market action discounts at all

Based on the assumption that all information related to the market is already reflected in prices, technicians believe it is crucial to understand what investors think of that information, known and perceived.

b) Prices move in trends

Technical analysts believe that prices have instructions, ie, up, down or sideways (flat). The basic definition of a price trend was originally submitted by Dow Theory.

c) History tends to repeat itself

Technical analysts believe that investors collectively repeat the behavior of investors who had previously shown earlier investors. For a technical trader, emotions in the market may seem random, but they exist. Investor behavior is repeated often; technicians believe that recognizable patterns (and predictable) prices will still appear on the price chart. Technical analysis is not limited to price charts, but also considers trends and directions in prices. For example, many believers technicians monitor opinion polls investors. This research measures the attitude of market participants, especially if they are bullish or bearish.

Although technical analysis was widely used by professionals, its popularity is not reflected in the academic community. But as time passed, the academic community also agreed with the fact that technical analysis helps to predict the market.

Sentiment analysis

When trading in the forex market one should know who the market participants and what they think the market. Each market participant has his own vision of the market, either bullish or bearish. The market actually reflects what all traders, me, you, professionals and all other market participants think about the market. As a retailer, any retailer can move the currency market. For example, if you are very optimistic with EUR / USD, the market does not care. So we know who the big players and we can follow to be in the right market direction.

Now we understand that each type of analysis has its own benefits and specialties. As a trader, the combination of these three types of analysis gives the best result. It would be foolish to trade without worrying about any aspect of the basics, while it would be really absurd to trade without technical knowledge of markets.

Trading system hedge funds

Learn about the trading strategy used by hedge funds that follow trends to benefit from financial markets.

In this Forex trading system, you will discover how I change to earn a living. It's not just me who is using this (or similar) trading system. There are at least a few dozen hedge funds that follow the trend and use the same approach to make money in the financial markets. I am sharing my knowledge with all new / experienced traders eager to learn a consistent winning trading strategy that has been working for me for the past 5 years. I would love for this system to be accessible to as many traders as possible and that is why I wanted to do it for free. I tried to keep it as concise as possible, so as not to waste time with unnecessary details. In the end, time is money!

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The objective of this course, besides showing a commercial system that has been working for me for a long time, is to try to protect it from the dangers of the financial markets. I have been trading during the day (without success) for some time before discovering that long-term trade is actually the only way to take advantage of the markets. I know that many of you are extremely anxious to earn quick money, but this is not the goal of this course. I would like to show you a system that works in the long term. More and more people are trying to make quick money in the financial markets nowadays, but every time they earn less in the short term. As some of you already know, trading is a zero-sum game. In other words, for every winner there is a loser. With that I will try to help you: how to be on the long-term winning side.

I'm sorry if my English is not perfect, but it's not my mother tongue. I still believe that for trade there are no barriers and traders must follow their dreams. I will do everything I can to help you reach your (financial) goals, but there is one thing I can not do for you: I can not teach you how to be disciplined! That's something you need to discover to be a successful trader ...

The Fx crosses are probably the best in the commercial environment (range). Currency crossings present the best opportunities for the trading range operator. Therefore, it may be a good idea to stay away from the ranges, as they may cost you. In contrast to the crossings, the raw materials and the main ones offer the operators the strongest and longest lasting opportunities. Coins such as Eur / usd, gbp / usd, aud / usd, usd / cad, etc. Trends must be considered. While gbp / chf, aud / chf, nzd / chf, etc. they must be considered as trading-range and therefore ignored for the sake of the successful implementation of this system. Let's recap again, what instruments are good for trends and trade environments.

Determining where to place the stop loss is quite easy. Once I have a signal in place, I am looking for the previous day high / low depending on the direction you are taking. For example, if you go long, I am seeing the minimum of the previous day and I place my stop there. Alternatively, if this is too close or too far (so the risk / reward ratio would be too low) I place my stop with the help of the ATR indicator. What I do sometimes is calculate 2 times the daily rate of ATR and place my stop just below that point. Take a look at the following image to see where I would have placed my stop in different crossing situations.

To make a profit, you can track your position with a 50-100 pip stop or use weekly / monthly support / resistance levels to make a profit. You must make sure to ride in a position as long as possible, because that's where you earn a lot of money. You may end up having some small winners

and some losers, but the point is to have at least a small number of home runs (big winners). An approximate result after 10 exchanges through the correct use of this system would be:

- 1 great winner

- 5 losses

- 4 small winners

The important thing here is to make sure that you can hold enough to have a big winner. And that's when the fun part begins ...

There are some last things that I want to mention instead of a conclusion. I will list them below: "

There is no trading system of the Holy Grail, "the only money of the Holy Grail.

-management skills.

- Cut losses quickly.

-Let the winners run as long as possible.

-It is patient and expect only the best configurations, because 99% of the money is obtained from the session and the wait.

- Always go with the highest time frames - do not be tempted to do it.

-go in a time frame less than 4 hours.

- Erase the attitude of getting rich quickly from your mind.

- Never risk more than 2% of your commercial capital in any single operation.

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Strategy envelopes bullish and bearish bars

This article is about one of the configurations of price action Forex most powerful and reliable available. It is the Bar Engulfing Bullish and Bearish. Some traders call it bullish or bearish outside bar. When playing from the right and with the knowledge of how to use it correctly areas, the envelope is a tool bar action prices extremely useful to have in the arsenal of the trader.

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Acronyms bearish and bullish engulfing for bar are beeb and BUEB.

Structure Engulfing Bar:

The envelope bar, as indicated in its title, is formed when "engulfing" completely the previous candle. The envelope can engulf bar over an earlier sail, but to be considered a shell bar, at least one candle should be consumed completely.

Where traders often confuse it with the bodies and the wicks of candles, but what traders only need to remember is that; envelope bar should have a higher height than the previous candle and a lower low. This takes into account both strands as the bodies of the sail, and while the high is higher and low is lower, then completely absorb the previous candle and is valid.

An example of a valid surround bass bar

An example of a bullish gobbled bar

When we search bars surround we seek large and very obvious protruding bars. The larger the bar Engulfing better to negotiate, because the bars are bars Engulfing momentum, and we want to trade with momentum on our side. The larger the bar, the greater the momentum!

Not all bars are interchangeable surround signals and this is where the knowledge of where to look is absolutely key. 2 basic criteria to be followed for a Engulfing rod is a rod Engulfing are interchangeable:

1: must be large and obvious,

2: must be formed in a balance point.

Those are only two basic things you should consider when evaluating a wraparound bar. When I say that the envelope bar should be formed at a point of oscillation, I mean if in an uptrend must be formed at a low swing or a downward trend must be formed in a high swing. This is absolutely critical to success with the surround bar!

The other main point for operators monitor their envelopes bars is where the envelope bar closes at the end of the session. Best envelopes bars close in the last third of the sail in the direction that negotiations will take place. For example; if an upward surround bar, then the best surround bars be closed upward in the upper third, indicating that the price has been tightly closed. This indicates that the price has been tightly closed in the direction the trader wants to operate. 

Example surround high quality bar

When combined time frames high as weekly and daily charts, and is used with the correct money management, Engulfing bar can be a tool very reliable and profitable Forex that every trader should have in their arsenal. 

The next step for the trader is to learn where to play the best places in the graph of encirclement and then the art of managing trade properly once you have entered. Not all bars are created equal envelopes and only because it has formed a wraparound bar, does not mean that the operator should automatically enter the operation. This is the next step in what the trader needs to learn.

I hope you enjoyed this article. If you liked what you read, be sure to press the buttons I like and leave a comment.

Forex change how professionals and Hunt Stops

The reason why negotiate with the price action can be profitable is because, although the Forex market is random, the humans that are not traded. Traders and organizations involved in the market operate by habit. In similar situations, humans behave in the same way because of their habits. These habits are those who believe the results. This is the reason why the same patterns tend to repeat themselves over and over again in the markets and also the reason why many traders tend to be arrested again and again.

Very often in our educational articles here on Forexobroker, we discussed the need to enter operations from areas of value. We have discussed how to find value in the market, but many traders still send emails regularly do not understand why we seek to enter from areas of value, and why it is so important. I hope that at the end of this article you can detect areas of market value and make exchanges more likely. For this article we will refer to unprofitable operators as "retailers".

Stop enter when professionals get benefits

The following chart shows a common pattern in the Forex market. Take a moment to study this table and note the key differences between where you enter the professional and the place to enter the retailer. On the left, you will notice that the retailer buys and performs a lengthy operation when the price is extremely high. Soon after, the retailer stopped because it lowers the price from this level. At about the same time that the retailer is stopped, professional traders enter the market in stores for a long position. When the price moves more, the professional trader will cover their long exchanges and start making profits. Professional traders will begin to leave the market after obtaining solid gains.

The obvious difference in this chart above is where each trader enters his long operations. While the professional trader waits for the price down again, the retailer moves away from the end.

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The chart above highlights why the entry into operations in extreme minimum or no recoil can be very dangerous. When operators from entering these areas that are at high or low ends, the big boys are taking profits and going market. While big go and take all their money market retailers are entering. Obviously, enter the market when the big emerging is not a smart plan. The best way to avoid this scenario is to enter from areas of market value or "hot spots."

Taking operations value areas

So now we know where not to enter, the next question is where should get a merchant? The best tickets are in areas of value. These areas are where professionals value seeking to enter their exchanges.

How to detect areas of value?

Basically, value areas are reversals of price from a high low end or support or resistance. Instead of entering from the top or bottom of the market, you can find value when the price tour. The price never moves in a straight line and have to move both higher and lower no matter how strong the trend. A common scenario is that for this; buy any weakness and sell any strength. What it means is that if the price drops (weakness) from a high end, then the price can be purchased from an area value, and if the price moves higher (resistance) from a low end, the price can be sold from an value area.

Below I have attached two tables of prices. The first graph shows the price moves from a higher rearward end, lower. This is the price that shows weakness and moves to the value input for a possible purchase. Note that if the trader had entered a long operation from the high level it would have been stopped. If, however, they had bought a long trade when the price showed weakness and back off again, enter at the same time professionals enter from an area of ​​value.

The second graph shows the same scenario, but with a short operation to sell. The price moves from the lower end back up. This higher movement is known as a decline in value.

Trading signals "investment" areas "value" support and resistance

After an operator to understand why it is so important to enter from areas of value, and how to identify them, they have to add some other key ingredients to find high probability trades. The following two ingredients that are added after the value area are;

  The price action signal used for trade

  Entering from support and resistance

The best exchanges occur when there are many factors pointing in the same direction. Obviously, the more factors can add as common ground for exchanges, the greater the chances that they work.

Below I have attached two examples of how to add signals key price action, solid support or resistance levels and are formed in areas of market value. Both configurations were high probability setups because of the many factors they had in their favor.

Lesson review

In life, the only way to make money is to buy low and sell high or buy low and sell high. If you want to make money in Forex, this same rule applies. A common commercial said that operators can put in trouble is "The trend is your friend". While this saying is very true, many traders do not understand how to trade successfully with the trend and enter from the value.

I hope this article has helped you understand how you can avoid getting into the market when big are leaving. Trade with the trend may be the most profitable type of negotiation and even more when operations are entered from areas of value.

Make money by trading reversal signs

In my daily communication with aspirants to one of the most common mistakes I see with them trying to negotiate Price Action, they fail to insert signs of reversion of the correct areas. This is a big mistake that many retailers come in and most of the time they do not even realize it.

The principle discussed in this article sounds very simple and can be used to make money not just in Forex, but life in general. It still surprises me how many traders go against it.

Remember this rule:

"Buy low and sell high" or the rest of the world "Buy cheap and sell expensive".

That sounds pretty easy, right? In Forex, we can make money with the price going up or down, but the rule remains the same. To make money, we need to be able to buy low and sell high, if we buy, or sell high and buy back down, if we stay low.

Balance Points

The easiest way to do this for price stock traders is to start entering from value areas or turning points on the chart. What this means? Instead of getting into short on the bottom of the trend, we fall short with a higher indentation or a high spin. If that does not make sense yet, stay with me, because I'll attach some graphics to make it clear.

So often the retail trader, instead of going into areas of value and break-even points using the rule above, goes on top of an upward trend to go long, and the lower part of the low tendency to go short. At these two levels, all the money has already been made and the big ones are rolling out their business and making a profit. The retail merchant will then be caught up with the price turning against them as the price moves back to an area of ​​value, or the area where they should be coming in!

The following chart explains how this rule usually applies to a short trade. In this graph there are two pin bars. The first pin bar forms on a low swing. It is here that many retail traders are going to make the mistake of going under a low swing and waiting for the price to fall. You can see that this pin bar is well on the last bid down and where the rest of the market is making a profit and starting to stretch. Without realizing it, the marketer has just entered the market, where the pros are coming out.

The second Pin Bar shows how a professional professional enters the market. Take note of how the professional trader is coming in from a high swing. This means that the trader is selling high and buying back down. This high swing is obviously much better value area to enter than Pin Bar.

The next chart shows the same rule, but for a long trade. Remember when you go too long we want to "buy low (cheap) and sell high (expensive)". The chart below has two pin bars formed at different oscillation points on the chart.

As you can see, the retail trader is bullish and expects the price to go up even higher. The professional marketer is smarter than that and realizes that the best entries are from areas of value. The professional trader expects the price to lower to a minimum and then enter. The trader trades low and then sells high.

Create space for our business

Not only does entering the wrong wobble points on the chart mean that you are being inserted into worthless areas, but it also means that you are entering support or resistance. Entering a trade directly into support or resistance can be a trade killer because when you enter and price moves to the key level, other traders will seek to trade in the opposite direction of yours.

If you start entering only from the correct pivot points, you will begin to create what is known as "space." What this means is that instead of entering and trading directly in support and resistance, you will be entering a trade that has room to move. Your trade will have a much better chance of moving toward you because there are no levels of support or resistance to disrupt.

The chart below illustrates this rule. This pair produced a pin bar. This Pin Bar was not formed on a high swing as it should have been, but rather on a low level. Because this Pin Bar was at the wrong balance point, the price has always been negotiated on a key level. You will notice in this example that the price was being negotiated in a very obvious support area. The price dropped and, as expected, jumped from this stand to climb.

The next chart example shows a high bottleneck. Using the rule discussed in this article, we now know that if we want to go long, we should buy low and sell high. Because this BUEB is long, we can see that instead of forming on a low swing, it actually formed in the wrong high swing. As this is formed at the wrong oscillation point, the price is now being traded directly at a key resistance level. We do not want to go into negotiations directly on key levels like this. The price does what you would expect and touches that area of resistance before selling and moving down.

Stick to Reversals

The rule we are discussing today is very important. When trading reversal signs, such as Pin Bar, 2 Bar Reversion Bar or Engulfing Bar, we must always follow this rule to ensure that we are entering areas of value rather than where the rest of the market is going.

Since all the price action signs mentioned above are signs of reversal, it is even more important to follow this rule. When entering reversal signals, we need to choose the price to "roll back". This means that we do not look for signs of reversal to act as continuation signals for the market to continue in the original direction.

An example of using a reversal sign to choose the price reversal is below. The warning for this low price on the Pin Bar was going up. The Pin Bar is formed and the trader is entering a short sale at this price. By trading like this, the trader is predicting that the price will "reverse" back down, or in other words, the price will stop going up and down and back down.

This rule is the same with all reversal signs. You must choose the price to reverse and not continue!

I hope you have enjoyed this article and start using this very important rule to start trading from value areas only. Don’t get sucked in like all the other retail traders!

How to identify the trend with 2 EMAs

Not really, actually this is the simplest part of the whole method. Albert Einstein once said, "Doing things as simple as possible, but not simpler", and for that, here is a good way to identify whether a market is in a trend.

Use two exponential moving averages:

21 EMA 

55 EMA

When the EMA 21 EMA exceeds 55, the trend increases. 

When the EMA 21 is below the 55 EMA, the trend is downward.

This trend definition is an oversimplification, but it's where we started.

Keep my graphics clean is important to me, and add additional moving averages can make things are a bit more messy than I normally like to see. 

For this reason, I colored 21 and 55 EMA with a gray color, so they are mixed to some extent with the white background of my graphics. On a black background, a darker gray for EMAs would be my preference.

Here is an example of how my chart looks with the 21 and 55 EMA is shown. 

The lighter gray on white graphic does not become overwhelming and annoying, and it is important to consider. When we exchange FMM operations take occasionally pass through the lines, and sometimes use the lines as targets and as support and resistance areas.

I do not want too distracted with lines, and submit it is a way to keep them in the background. They are there when we need it and remain silent when we do not.

Why the 21 and 55 EMA?

You can experiment with different settings as you like. 13 and 21 are common to moving averages. In many tests, I found that 21 and 55 are the most reliable to determine a trend. They are slow enough to determine when a real trend has legs, but fast enough to not delay in shifting of a trend.

By observing a graphic with the EMA 21 and 55, you will see that these two o'clock are extremely robust levels of dynamic support and resistance, and this element becomes excellent MA for trend followers.

The price never strays too before returning to the EMA 21 and then to the 55 EMA. 

This is an important counter trend trading, the price moves away from the moving averages, but very quickly return to these levels. And because of the ability to provide excellent support and resistance, these moving averages are also amazing goals.

21 and 55 EMA work in all maturities, from 1 minute to month. This simplifies things too, without having to look different MA for different time frames, and as you knows, simple is good!

free to try your own settings, experiment with many combinations, with Exponential and Simple, or a combination of the two, feel you may find something you feel works best for you. Either way, the following pages will show you how to use them.

EMA 21 and EMA 55 as support: 

EMA 21 and EMA 55 as resistance

Even when 21 and 55 are large areas of support and resistance are also excellent to recover the price. This concept alone makes these moving averages are major objectives in trade counter-trend.

An example of gold (AU) shown. Lately, Gold has had an incredible trend, and as you can see clearly, moving averages have provided excellent support as the price has gone up, but at the same time, gold prices have always returned to moving averages.

See the MA as support, resistance and objectives opens a new world of business possibilities!

In the next issue, we'll show you how confarmar and follow the trend ,