3 Types of Forex Market Analysis - Geeks 'n' Guide — Techs & Business


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October 16, 2018

3 Types of Forex Market Analysis

Talking about analysis, it is the process of studying or examining of elements or structure of something in a very detailed manner. Analysis is done in such a way to make taking of decisions very easy. In reference to our forex trading series, we will be discussing 3 types of Forex Market Analysis :

  • Technical Analysis
  • Fundamental Analysis 
  • Sentiment Analysis 

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Believe me, all the three types of analysis are very important in forex market analysis (especially the first & second type). A brilliant forex analysis take recognition of the three types of forex market analysis but it depends on your own way of creating your strategy.

Technical Analysis 

Basically, technical analysis means the study of price movements. The theory is that a person can look at historical price movements and determine the current trading condition and potential price movements. It is quite cool! All current market information is reflected in price, so price action is all you need with technical analysis.
The technical analysis is just about keeping eye on trade based on their historical pattern – history tends to repeat itself. Technical analyst look for similar patterns the currency pair had formed in the past in recognition to the power of resistance and support. Traders take action believing the price will act the same way it does before.

Fundamental Analysis 

Whenever you here fundamental analysis, the first thing that should come to your mind should be trading to news. Fundamental analysis is a way of looking at the forex market by analyzing economic, social, and political forces that may affect the supply and demand of an asset.
Sure! 95% if not all of us attended economics class. And I believe in one way or another we should have heard of demand, supply, GDP and all those economics terms. In one sentence, trading forex is more of utilizing all those things you have learnt back in your high school & university days. If I'm correct, Adam Smith made reference to demand and supply as "the invisible hands of economics". The definition is much more relevant in forex market analysis.
Country's economy (based or qouted) is important in fundamental analysis. Several factors affect the country's economic stability such as unemployment rate, monetary policy, high interest rates e.t.c.
Now let us think of fundamental analysis this way,
 "If there is a rise in country's economic stability, investors will be happy and willing to purchase assets in that country. For this to be possible, investors will have to exchange his money to the currency of the country in question. Boom!!! The exchange rates will dramatically increase in respect to the total investing power.

Sentiment Analysis 

We have been discussing about analysis based on charts and news but why not based on you. Yeah! Sentiment analysis is basically based on your own opinion – how sentiment are you to a particular currency. Do you believe the currency will actually gain strength or reverse the case?
Sentiment analysis is very important. Each traders has his or her own opinion but believe me, no opinion is either valid or false. It is just based on what you think (sentiment).
Forex market analysis through sentiment simply means trying to measure the temperature of a room without a thermometer. It is all up to you to gauge how the market is, whether bullish or bearish.


Technical, fundamental and sentiment analysis are all important in analyzing forex market. A profitable trades must have given recognition to all types of analysis. Either technical analysis or fundamental analysis, our goal is to make profit...... Lol. See yah

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