How To Predict Forex Movements

How To Predict Forex Movements


It’s time to get started! In Metatrader, you learned how to open and close trading orders. You are now prepared to trade on the Forex market. But how do you know whether to buy or sell? Is there a solution?

Fortunately, there is! You buy a currency if you believe its exchange rate will rise in the future, and you sell it if you believe its price will fall.


To make such a forecast, you must consult two sources: a Metatrader chart and an economic calendar. Below is a quick guide to analyzing the Forex market and trading profitably.


How can fundamental analysis enable you to make money?

Fundamental analysis does not require you to work extremely long and hard hours. Fundamental is short for “economic.” All other things being equal, a healthy economy will see its currency rise.


We must compare the economies of the eurozone and the United States in order to predict the future value of the euro against the dollar. Whichever economy is performing better, that currency will strengthen. Imagine, for instance, that during the same time period, the US economy grew by 2% but the European economy only grew by 0.5%.


Because the strength is clearly on the side of the US, traders expect the EUR to fall against the USD. They will sell EUR/USD to profit from the decline.

Every day, the world’s most powerful countries release economic data. The calendar of these releases, as well as forecasts and actual figures, can be found in the economic calendar. You’ll get a lot of great trade ideas if you check them on a regular basis.


Examine it out! On May 23, 2018, a British indicator fell short of expectations, while US figures were fine. As a result, the GBP/USD fell that day. You could have made money by starting a sell trade!


How to Profit from Technical Analysis

Technical analysis is also less complicated than it appears. It does not necessitate any knowledge of math or mechanics. All you have to do is draw lines and watch the indicators, just like you would your car’s speedometer.


The basic idea is to buy at low levels and sell at high levels. Furthermore, a trend is your friend. A trend occurs when a chart moves in one direction – up or down – for an extended period of time. Traders buy in uptrends and sell in downtrends. An uptrend occurs when the price consistently makes higher lows and higher highs.


When the price forms a series of lower highs and lows, it is said to be in a downtrend. An example of a downtrend is shown below.


Notice how traders typically connect chart highs and lows using so-called trendlines, as we did in this example. When you connect two highs with a descending line, you have a downtrend (points 1 and 2). You can use technical analysis to predict that the price will reverse down the next time it reaches this line (point 3), allowing you to sell. You will be able to close your trade at either point 4 or point 5.


This is just one of the techniques available to you. Check out our tutorials for even more ways to gain.


What type of analysis should be used?

The logical question now is when to employ fundamental analysis and when to employ technical analysis. Some traders only trade on economic news, while others believe that the price chart is all they need to succeed. Both methods of analysis have advantages. There is also an opportunity to combine the best of both methods: use economic analysis to determine whether to buy or sell and then use MetaTrader technical tools to determine the optimal level to enter your trade. You will thus double your chances of profit!




















Leave a Reply