Technical Analysis and Fundamental Analysis on Forex

As the article before that explained the Aspect of Forex Trading, The traders make decisions using two analysis namely Technical Analysis and Fundamental Analysis. 

Technical Analysis using many forecasting method such charts, trend lines, indicators such as moving averages, Moving Average Convergence Divergence (MACD), Relative Strength Index (RSI), Bolinger Band, Fibbonaci, Camarilla, Pivot point, pattern / candlestick patterns and mathematical analysis others to study market opportunities.

Fundamental Analysis predict price movements by translating various information on economic conditions, including news, reports and policies issued by the government, and rumors.

Technical Analysis vs Fundamental Analysis 
Let us go back to the basics of forex trading. What causes the price movement?
The answer is: Expectations and speculation from the market. News isn’t the cause of price movements. On the other hand, the indicator / mathematical calculation isn’t driving the price. 

In Technical Analysis, when a trader based on the graph, for example, the trend line and the MACDI(Moving Average Convergence Divergence) line has shown that the price has broken through the line of the trend line and the MACD lines have intersections. And then when prices go up, this does not mean that the pattern of the indicators that led to the movement of the price! But because many traders perpatokan on these lines. At that time, they did the same thing (buying / LONG) according to the theory of the indicator concerned. This is what causes the price really go up according to predictions of the indicator. The indicator is a follower and not as the cause of price movements.

In Fundamental Analysis, a drastic price movements occur when there are events that are not unexpected. It could be an increase / decrease in interest rates from the central bank, to political events or wars. An example is the events of 9/11(were a series of four coordinated suicide attacks upon US). When the events of 9/11 occurred, rate USD weakened because everyone expected the event will greatly affect the U.S. so most likely USD weakened. This incident led many market participants to sell USD. Impact USD rate actually dropped dramatically.

Tips for traders

For those of you who use Technical Analysis, the tips that we provide are only use common indicators that are widely used by traders and trade only when there is no important economic news.
For those of you who use fundamental analysis, the tips that we provide are patience, discipline, trade only when there are important economic news and make sure the time / clock you use is really appropriate.

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