Support and Resistance
Support and resistance are two of the most frequent forex terms you will come across in technical analysis. Simply put, support refers to a floor in price action where a downward movement changes course. On the other hand, resistance stands for a ceiling in price action where an upward movement reverses. A good rule of […]
Using the Dollar Index
Another useful tool in fundamental analysis is using the U.S. dollar index or USDX for short. This keeps track of the dollar’s performance against a basket of currencies. Included in this basket of currencies are the euro, yen, pound, Canadian dollar, Swedish krona, and Swiss franc. Aside from providing a general direction of dollar behavior, […]
Understanding Market Sentiment
Briefly introduced in the earlier sections is the concept of market sentiment, which involves gauging whether traders are in the mood to take on more risk in their portfolios or not. This is relevant in the forex market because higher-yielding currencies or those with central banks offering higher interest rates tend to benefit during risk-on […]
Correlations in Other Financial Markets
Aside from watching economic data releases or keeping track of central bank policy biases, monitoring other financial markets can also be helpful in predicting forex price moves. To be specific, there are currencies that move in tandem with asset prices or precious metals while others are negatively correlated to other financial markets. For one, the […]
Economic Releases You Can Trade
The forex economic calendar is one of the most useful tools for traders, especially those who incorporate fundamental analysis in determining their currency biases. A typical forex calendar lists the upcoming data releases and indicates whether those could have a strong or low impact on the currency involved. These also post the previous period’s data […]
Monetary Policy and Central Banks
Monetary policy and interest rate expectations play a central role in fundamental analysis, as these determine the rate of return for holding a country’s assets and therefore the demand for its currency. As mentioned in the previous section, central banks’ decisions carry a major influence in this regard. Of course these decisions are based on […]