Forex Analysis

an imageWithout doubt, one of the best features of the foreign currency exchange trade market is the market trends, tendencies that agents can identify, pointing the best moments for investors to make the most successful decisions. Analysts can foresee the market trends through meticulous technical and fundamental analyses.

Technical analystsare moved by the past rates and therefore the amount of data for them to be able to forecast the future rate movements is quite enormous. Technical indicators (Accumulation Distribution, Advance-Decline lines and ratios, Arms Index TRIN,On Balance Volume, Commodity, SAR, Channel Index, Moving Averages, Momentum, Relative Strength Index RSI or Volatility) shown on Chart Patternspoint towards the market turnarounds. The technical analysis extracts the information straight from the current rates; the currency value at one point reflects the future changes on the rates as ForEx is a global market. Technical analysis believes in the possibility of a pattern that sets up the market and analysts have studied the market and its turning points to be able to apply long-term analyses.

The trade markets all around the world are constantly facing difficult situations that affect the trading channels, especially when large institutions like governments and central banks are going throughrough moments. The various socialevolution, political changes and economic matters are, for the fundamental analysis, the main factors to be considered in any trade market. The Foreign Exchange market faces political instability, economic crisis and social events, as currency rates only fluctuate. Fundamental analysts focus their efforts on both, long-term and short term currency value as the fundamental analysis requires a total control of the economic conditions of the market. Fundamental analysts will make use of economic, social and political indicators, obtaining the relationships between the different foreign currencies; fundamental analyses picture the market through macroeconomic values such as, productivity, gross domestic product, inflation, country’s political stability, growth rate, real state, market’s assets, unemployment rates, foreign exchange indicators, interest rates, stocks, bonds, etc.

It is important to understand that both analyses are essential in ForEx market as both points of view can perfectly reflect the most realistic situation of the market.