The method’s of analysing the Forex Market

Successful forex trading is the art of being able to predict when currencies are going to shift in value in relation to each other, and what direction that shift is going to be in. The good news is that those fundamentals are relatively simple; is the dollar going to weaken against the yen? Will the pound pick up against the euro? Another piece of good news is that there are huge swathes of data available to the average retail trader to enable them to make these decisions.

In this article, we will learn about the different types of market analysis to do the trading in better way. However, it is an overview of the main planks of Market analysis a trader needs to bear in mind, and a look at a few of the types of tool which can make that analysis easier and more accurate. 

1. Fundamental Analysis

Fundamental analysis is often used to analyse changes in the forex market by monitoring figures, such as interest rates, unemployment rates, gross domestic product (GDP), and other types of economic data that come out of countries. For example, a trader conducting a fundamental analysis of the EUR/USD currency pair would find information on the interest rates in the Eurozone more useful. Those traders would also want to be on top of any significant news releases coming out of each Eurozone country to gauge the relation to the health of their economies. Fundamental analysis based on one-off events of this kind requires a close attention to detail, up to the minute (or even second) access to newsfeeds and the willingness to take up positions instantly.    

2. Technical Analysis

Technical Analysis is the study of how prices in freely traded markets behaved through the recording, usually in graphic form, of price movements in financial instruments. It is also the art of recognizing repetitive shapes and patterns within those price structures represented by charts. Normally technical analysis comes in the form of both manual and automated systems. A manual system typically means a trader is analyzing technical indicators and interpreting that data into a buy or sell decision. An automated trading analysis means that the trader is “teaching” the software to look for certain signals and interpret them into executing buy or sell decisions. Where automated analysis could have an advantage over its manual counterpart is that it is intended to take the behavioral economics out of trading decisions. Forex systems use past price movements to determine where a given currency may be headed. But  past performance is no guarantee of future success, but the relative stability of the major currencies, over the long term, means that patterns of movement can become relatively predictable. 

3. Weekend Analysis

There are two basic reasons for doing a weekend analysis. The first reason is that you want to establish a “big picture” view of a particular market in which you are interested. Since the markets are closed and not in dynamic flux over the weekend, you don’t need to react to situations as they are unfolding, but can survey the landscape, so to speak.

Secondly, the weekend analysis will help you to set up your trading plans for the coming week, and establish the necessary mindset. A weekend analysis is akin to an architect preparing a blueprint to construct a building to ensure a smoother execution. Tempted to trade without a plan? Bad idea: Shooting from the hip can leave a hole in your pocket.

4. Session highlighter

One of the key attractions of forex trading is the fact that the currency markets are open somewhere in the world 24 hours a day throughout the week. The fact that different markets are open at different times of the day means that the sessions within those markets are likely to have different impacts on the pairs of currencies which a trader is working with. A session highlighter tool can be used to divide a traders charts into these various sessions, and then to highlight any movement that occurs over set periods, such as a minute, a specific number of minutes or an hour.

5. Look for a Consensus in Other Markets

We can gain a perspective of whether or not the markets are reaching a turning point consensus by charting other instruments on the same weekly or monthly basis. From there, we can take advantage of the consensus to enter a trade in an instrument that will be affected by the turn. For example, if the USD/JPY currency pair indicates an oversold position and that the Bank of Japan (BOJ) could intervene to weaken the yen, Japanese exports could be affected. However, a Japanese recovery is likely to be impaired without any weakening of the yen.

6. Volatility Tool of Forex 

A volatility tool will show a trader how much, and in what way, a pair of currencies has moved on an hourly basis during a period such as the last thirty days. This enables the trader to build up a fuller picture of the way the currency pair behaves, and note any patterns such as recurring movements on specific days or at a specific time of the day. The more advanced versions of the tool will calculate the typical movement range and, given a time period by the trader, will display a percentage probability that the pair will stay within the set range.  

7. Time the Trades

There is a much higher chance of a successful trade if one can find turning points on the longer timeframes, then switch down to a shorter time period to fine-tune an entry. The first trade can be at the exact Fibonacci level or double bottom as indicated on the longer-term chart, and if this fails then a second opportunity will often occur on a pullback or test of the support level.

Patience, discipline, and preparation will set you apart from traders who simply trade on the fly without any preparation or analysis of multiple forex indicators.

8. Acquiring Forex Trading Systems and Strategies

A trader’s currency trading system may be manually applied, or the trader may make use of automated forex trading strategies that incorporate technical and fundamental analysis. These are available for free, for a fee, or can be developed by more tech-savvy traders.

Both automated technical analysis and manual trading strategies are available for purchase through the internet. However, it is important to note that there is no such thing as the “holy grail” of trading systems in terms of success. If the system was a fail-proof money maker, then the seller would not want to share it. This is evidenced in how big financial firms keep their “black box” trading programs under lock and key.

Conclusion

Undertaking and applying analysis is a key practice of any successful trader. The degree of analysis a trader carries out will depend upon their inclination and appetite for trading. Analyse the market with the way that is suitable for trading and open account in Winstone prime start trading.

Latest news suggests uptrend of Bitcoin

According to Bloqport’s recent data, bitcoin, which has ended the month of March with an overall gain of 29%, has now been in the uptrend for six consecutive months. The data also shows that the crypto asset’s value has nearly doubled from its December 2020 closing price of $29,383 to its current value of $58,647. With this fast run, bitcoin has already outperformed many other assets including gold.

Adding to the strength of Bitcoin, New research from Glassnode, an on-chain data platform, shows continued growth in bitcoin (BTC) held between one month and six months, indicating strong conviction behind the recent price rally. According to the research, New Holder’s (meaning, those holding crypto) are sitting on a near 500% increase since October. BTC purchased between $10,800 and $58,800 now represents 25% of the total supply without any sign of slowing down. This means Holder’s have continued to accumulate BTC throughout this bull market.

Another news joins favoring the bull move of BTC , In the upcoming week, US-based major crypto exchange Coinbase might provide more details about the status of the crypto market in the first quarter of this year as it aiming towards direct listing of its shares on April 14.

On April 6, the company will hold a conference call to discuss its first quarter 2021 estimated results and will provide a financial outlook for 2021.Unlike the traditional initial public offering (IPO), in a direct listing, the company sells shares directly to the public without any help from intermediaries. Coinbase previously said it will not raise any new capital during this listing. As per the report, it was valued at around USD 90bn during its final week of trading on Nasdaq’s private market.

According to Coinbase, they had 43m verified users last year and 2.8m monthly transacting users. Also, they claim that they work with 7,000 institutions and 115,000 ecosystem partners in over 100 countries.

BTC/USD 4 Hour Chart:

Support: 57934.5 (S1), 57119.1 (S2), 56387.4 (S3).

Resistance: 59481.7 (R1), 60213.5 (R2), 61028.9 (R3).

Amidst all the catalysts reflecting a clear uptrend for Bitcoin in the coming days, we expect a bullish trend for BTC/USD.

China’s downbeat data pressurizes Aussie

China’s Negative surplus puts pressure on the Aussie. Also contributing to the Aussie’s weakness could be the US dollar’s rebound.

China’s Caixin Manufacturing PMI came in as 50.6 versus 51.3 forecasts and 50.9 prior. This gives a suggestion that the activity figures from Australia’s largest customer contrast the upbeat official readings published earlier in the week.

Other Australian data was a mixed bag with retail sales falling a smaller-than-expected 0.8% in February, while the trade surplus missed forecasts at A$7.5 billion ($5.69 billion) because of a surprisingly sharp rise in imports. Much more emphatic were Home loan monthly figures showing -1.7% versus expectation of 12.3% delivering a windfall to consumer wealth and confidence.

But the surge has done little to shake the Reserve Bank of Australia’s (RBA) commitment to super-loose policy, which is focused on driving unemployment down to levels that will lift wage growth and inflation.

“With this in mind, we expect the RBA to remain dovish, despite rapidly rising housing prices and growth in new housing finance,” said Paul Bloxham, Australia chief economist at HSBC.”We expect the RBA to keep its cash rate and 3-year yield targets at 0.10% in 2021 and 2022, and to extend its QE programme beyond October.”

News of no fresh covid cases in New South Wales (NSW) and an absence of further covid lockdown in Brisbane gave a helping hand to Aussie.

US President Joe Biden’s $2.25 trillion infrastructure spending plan, Positive US data and the hopes of faster economic recovery on strong vaccination drive in America and the UK supports the US dollar.

AUD/USD 4 Hour Chart:

Support: 0.7576 (S1), 0.7558 (S2), 0.7528 (S3).

Resistance: 0.7625 (R1), 0.7655 (R2), 0.7673 (R3).

China’s negative surplus along with other downbeat data and stronger US dollar sentiment puts pressure on the Aussie and we expect a bearish trend for AUD/USD.

ANZ Biz confidence & activity outlook weighs kiwi

Final readings of New Zealand’s ANZ Business Confidence and Activity Outlook slipped below the initial forecasts and prior read-outs in the latest announcement showing -4.0 and 16.6% figures respectively. The key points of the readings were “All forward-looking activity indicators were lower in the second half of the month. The preliminary results would not have captured the full lockdown impact. The construction sector reported being much less busy, though they still had the strongest activity expectations across the economy. Inflation pressures remain strong.”

New Zealand’s central bank has eased restrictions on bank dividend payments, allowing them to distribute as much as 50% of net income to shareholders. The decision partially reverses steps the Reserve Bank took in April last year to provide more credit to the economy via the banking system. The remaining 50% limit will be lifted in July 2022 subject to no worsening in economic conditions, the central bank said in a statement Wednesday in Wellington.

“Ongoing uncertainty is expected to constrain business investment and household spending growth,” Reserve Bank Deputy Governor Geoff Bascand said in a statement Wednesday. “Given the uncertainties ahead, it is appropriate to retain some restrictions on the dividends that banks can pay.”

On the other hand, Hopes of a $3.0 trillion US infrastructure package and faster vaccinations in the West are impacting the market mood and creating an uptrend for the greenback. Also favoring the mood for the dollar could be increasing odds of the US-Iran talks over the nuclear deal.

Allegations that Russia stole thousands of the US State Department data and the coronavirus (COVID-19) woes in the European Union (EU) and Australia also puts pressure on the kiwi.

NZD/USD 4 Hour Chart:

Support: 0.6959 (S1), 0.6936 (S2), 0.6899 (S3).

Resistance: 0.7020 (R1), 0.7057 (R2), 0.7080 (R3).

China’s NBS Manufacturing PMI in March is expected to precede the PMI of 51.2 and 50.6 which could give direction to the NZD/USD but as of now recent catalysts weighing on the new Zealand dollar we expect a bearish trend for NZD/USD.