Successful Trading- Fusion of Fundamental & Technical Analysis
Successful Forex trading is fusion of fundamental analysis and technical analysis and a decision based on both.
Fundamental analysis is very important part of forex trading. Fundamentals are factors of any economy which have the power to derive the currency and set a new direction.
A keen forex trader keep eye on these economic factors, analyze the effects and take timely action to cultivate the fruits.
Among the fundamental factors, Lets discuss the interest rates with most recent example:
Interest rates is very crucial part of a economic policy of a country. Interest rates have numerous aspects and effects on economy . But to cut things short for forex, as a rule of thumb when a country's central bank increase the interest rate , its considered good for economy/currency and investment start to move from economies bearing lower interest rates to those of higher ones. Its very logical that one buys an asset which give more return and sell which carries lesser.
A recent example we can see is FED(USA) and BOE (GBP) hints the increase in internet rates to curb the soaring inflation. Later increase the interest rates and we saw these currencies rising against JPY which has no announcement or hint of rising interest rates.
We saw investment fleeing to these currencies and selling of JPY despite Russian-Ukraine conflict. Investors even rejected the JPY as safe heaven amid war circumstances and went for reaping the better returns. We are seeing JPY is making historical lows. You can see monthly chart of JPY index.
Now here technical analysis will work. We are seeing the JPX index reaching near the previous consolidation area which may act as support. Price will stay there for a while and likely to rebound.
We may see reversal in USDJPY and GBPJPY after some more advancement.
Fundamentals and Technical analysis work together to make a sound decision and a successful trading.
Wish you a successful trading journey.
Comment, like and add anything to my views, Cheers!
Fundamental analysis is very important part of forex trading. Fundamentals are factors of any economy which have the power to derive the currency and set a new direction.
A keen forex trader keep eye on these economic factors, analyze the effects and take timely action to cultivate the fruits.
Among the fundamental factors, Lets discuss the interest rates with most recent example:
Interest rates is very crucial part of a economic policy of a country. Interest rates have numerous aspects and effects on economy . But to cut things short for forex, as a rule of thumb when a country's central bank increase the interest rate , its considered good for economy/currency and investment start to move from economies bearing lower interest rates to those of higher ones. Its very logical that one buys an asset which give more return and sell which carries lesser.
A recent example we can see is FED(USA) and BOE (GBP) hints the increase in internet rates to curb the soaring inflation. Later increase the interest rates and we saw these currencies rising against JPY which has no announcement or hint of rising interest rates.
We saw investment fleeing to these currencies and selling of JPY despite Russian-Ukraine conflict. Investors even rejected the JPY as safe heaven amid war circumstances and went for reaping the better returns. We are seeing JPY is making historical lows. You can see monthly chart of JPY index.
Now here technical analysis will work. We are seeing the JPX index reaching near the previous consolidation area which may act as support. Price will stay there for a while and likely to rebound.
We may see reversal in USDJPY and GBPJPY after some more advancement.
Fundamentals and Technical analysis work together to make a sound decision and a successful trading.
Wish you a successful trading journey.
Comment, like and add anything to my views, Cheers!