Besides fundamental aspect, Forex markets are influenced by number of technical indicators. Though, more about each of most important technical indicators will be said in our section dealing with technical analysis, it is needful to emphasize at the very beginning what traders must be cautious about. Technical part of forex deals with forecasting the direction of prices through the study of past market data, primarily price and volume. This study is done through analysis of Forex charts in which chart patterns, such as the well-known head and shoulders or double top/bottom reversal patterns are searched for. It also includes study of technical indicators, moving averages, and look for forms such as lines of support and resistance, and many other technical parameters.
Both fundamental and technical analysis are equally important and traders most be up-to-date with latest economic events but must not neglect charts and technical parameters before placing their bids. In the next two sections we will say more about most important aspects of fundamental and technical analysis.
Introduction to Forex – Chapter V. - What affects Forex markets?
- Tuesday, Dec 16 2014
In the final part of introductory part in Forex trading we should say something about factors that affect Forex markets. As it was mentioned in the previous chapters Forex trading is a globalized activity, with no centralized marketplace. However, this means that macroeconomic events play great part in price movements. The economic health of a nation's economy is an important factor in the value of its currency. There are several factors on which economic health depends, but Forex markets are affected by incoming data on a daily basis consisting of numerous economic figures such as GDP, PMI, PPI, CPI, etc., as well as interest rate decisions, statements of important government and central banks officials. This part of Forex trading is referred as fundamental analysis and will be discussed in next section of Forex education.