Technical Analysis and Fundamental Analysis

As in the case of stock markets, there are two main areas of strategy in the Forex market: technical analysis and fundamental analysis. Technical analysis is the most used strategy by individual Forex traders. Let's explore how these two strategies directly apply to Forex trading.

Fundamental analysis, typically used to predict long-term trends, is a challenging strategy in the Forex market. However, it's worth noting that some traders focus on trading short-term based on news releases. There are various fundamental indicators of currency values released at different times. Here are a few examples:

- Consumer Price Index (CPI)

- Non-farm Payrolls

- Durable Goods

- Retail Sales

- Purchasing Managers Index (PMI)

It's important to remember that these indicators are not the only fundamental factors that need to be examined. There are also different types of meetings where quotes and commentary can have a significant impact on the markets, like any report. These meetings are typically held to discuss matters such as inflation, interest rates, and other factors that may affect currency values. Sometimes, even the wording used when addressing certain topics, like the Federal Reserve chairman's comments on interest rates, can lead to a volatile market. Two important meetings to watch out for are the Federal Open Market Committee and Humphrey Hawkins Hearings.

You can visit https://www.siegfund.com/trading/economic-calendar , where SIEG will keep you posted all the important news around the world.

Reading reports and commentaries can help Forex analysts gain a better understanding of long-term market trends and also benefit short-term traders from extraordinary events. It is recommended to always have an economic calendar to stay updated on when these reports are released. Your broker may also provide similar information.

Price trends in the Forex market are analyzed by technical analysts, similar to their counterparts in the equity markets. The main difference lies in the time frame involved, as Forex markets are open 24 hours a day. Due to this difference, certain forms of technical analysis that consider time need to be adapted for the 24-hour Forex market. The following are some common forms of technical analysis used in Forex trading:

- Fibonacci studies

- The Elliott Waves

- Parabolic SAR

- Pivot points

Many technical analysts tend to combine different technical studies to improve the accuracy of their predictions. One common approach is combining Fibonacci studies with Elliott Waves. Others may try to create trading systems to consistently identify similar buying and selling opportunities.

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