Forex Patterns and Forecast Methods Used Today For Successful Forex Trading! Part 2

[othompso]

This Article will outline the technical analysis and fundamental analysis used by professional forex traders to land huge profits in forex trading. This Article provides insight into the two major methods of analysis used to forecast the behavior of the forex market. This is also a follow up from Forex Patterns and Forecast Methods Used Today For Successful Forex Trading! Part 1, if you have not read part 1 please do so to bring yourself up to speed.

Technical analysis and fundamental analysis differ greatly, but both can be useful forecasting tools for the forex trader. They have the same goal - to predict a price or movement. The technician studies the effects, while the fundamentalist studies the cause of the forex market movements. Many successful traders combine a mixture of both approaches for superior results.

Note: If both fundamental analysis and technical analysis point to the same direction, your chances for profitable trading are much better.

So let us begin with where we left off on the technical analysis:

Moving Averages – Are used to emphasize the direction of a trend and to smooth out price and volume fluctuations, or “noise”, that can confuse interpretation. There are seven different types of moving averages:

- Simple (arithmetic)
- Exponential
- Time series
- Weighed
- Triangular
- Variable
- Volume adjusted

The only significant difference between the various types of moving averages is the weight assigned to the most recent data. For example, a simple (arithmetic) moving average is calculated by adding the closing price of the instrument for a number of periods, then dividing this total by the number of times.

The most popular method of interpreting a moving average is to compare the relationship between a moving average of the instrument’s closing price, and the instrument’s closing price itself.

Sell signal: when the instrument’s price falls below its moving average
Buy signal: when the instrument’s price rises above its moving average

The other technique is called the double crossover, which uses short-term and long-term averages. Typically, upward momentum is confirmed when a short-term average (15 –day) crosses above a longer-term average (50-day). Downward momentum is confirmed when a short-term average crosses below a long-term average.

MACD – Moving Average Convergence/Divergence – A technical indicator, developed by Gerals Appel, used to detect swings in the price of financial instruments. The MACD is computed using two exponentially smoothed moving averages of the... To get full story click => Forex Patterns and Forecast Methods Used Today For Successful Forex Trading! Part 2

[othompso]

Fed Unveils $800B Consumer Loan Program

CURRENCY TRADING SUMMARY – 26th November 2008



· U.S. Dollar Trading (USD) came under pressure after details emerged of a new FED program that will buy $800 billion in GSE mortgage backed debt and offer another $200 Billion in a new program designed to offer support to the consumer loan backed asset market. US shares reacted well and shrugged off the Q3 GDP numbers of -0.5%. Also released Consumer Confidence in November rose to 44.9 vs. 38 expected. In U.S. share markets, the NASDAQ was down 7 points (0.5%) and the Dow Jones was up 36 points (0.43%). Crude Oil closed down $3.73 ending the New York session at $50.77 per barrel. Looking ahead, October Durable Goods Orders are expected at -3% vs. +0.9% last month. Also released, October New Homes Sales expected to fall to 445K vs. 464K previously.

· The Euro (EUR) staged an aggressive rally on the back of USD selling after the new Fed plan was released. When the stock rally stalled EUR/JPY selling started to weigh on the single currency but still managed to close above 1.30. German GDP was confirmed at -0.5% in Q3 and Consumer Confidence beat expectations at 2.2 vs. 1.5 forecast. Overall the EUR/USD traded with a low of 1.2805 and a high of 1.3081 before closing the day at 1.3060.

· The Japanese Yen (JPY) had a mixed day gaining against the USD but losing ground against the EURO and GBP as there respective majors gained heavily. AUD/JPY also underperformed falling heavily from highs early in the day as commodities fell and equities stalled. Overall the USDJPY traded with a low of 94.96 and a high of 96.92 before closing the day around 95.20 in the New York session.

· The Sterling (GBP) extended the recovery envelope even after BoE’s King had very dovish things to day about the UK economy. King’s comment included the possibility of a severe recession looming in the UK. 1.5000 was tested before USD weakness lead to a massive rally up to 1.5500 highs. Overall the GDP/USD traded with a low of 1.4985 and a high of 1.5535 before closing the day at 1.5480 in the New York session.

· The Australian Dollar (AUD) rally came unstuck as selling above 65 emerged early in the Asian session. Less than expected gains from Asian equities pressure the AUD/JPY lower but as the EURO and GBP surged the AUD/USD got a second wind and 0.6600 was scaled for a brief moment before falling back to .6450 supports. Overall the AUD/USD traded with a low of 0.6333 and a high of 0.6617 before closing the US session at 0.6510.

· Gold (XAU) continued to be well supported although heavy falls in Oil kept gains into the $800’s limited. Overall trading with a low of USD$803 and high of USD$831 before ending the New York session at USD$821 an ounce.

You can find additional Forex Trading Information at ==> Forex Trading System News or Forex Trading System Information

[bonfmedia]

Actual trend could not be totally guarateed by moving averages either of small time frame or big one but my suggestion is to critically examine the trend behaviour of the currency you are used to,couple with fudamental analysis and technical analysis at the period you want to trade.i thinks if you dont know how to blend all these it is better to invest on professional program while you are leaning all these. Visit: http://www.bonfonlineforex.page.tl for a reliable program.