Monetary policy refers to the actions and strategies employed by a central bank of a respective country to regulate the money supply, interest rates, and credit conditions in an economy. While monetary policy primarily aims to achieve domestic economic objectives, its implementation has a profound impact on the currency market. There are two types of monetary policy:

• Expansionary monetary policy
• Contractionary  monetary policy

Expansionary monetary policy:–

During periods of rising unemployment and low economic growth, such as recession, central banks will increase the money supply by cutting interest rates or using other tools. This action taken by the central bank is known as expansionary monetary policy. In 2008 the Fed cut interest rates to an all-time low to stimulate the U.S. economy when recession looms in the U.S. Refer to Figure 3.1 to understand the impact of this policy.

Contractionary monetary policy:-

During periods of high economic growth and rising inflation, the central bank will implement more restrictive monetary policies. To reduce the money supply to the economy central bank will increase interest rates or use other tools. This action taken by the central bank is known as Contractionary monetary policy. This type of policy is also used to correct the trade deficit of a country. The reason for the trade deficit is the excessive consumption of imported items. Refer to Figure 3.2 to understand the impact of this policy.

Some of the monetary policy tools used by central banks of any country include Setting reserve ration requirements, conducting Open market operations, varying Interest rates, Forward guidance, etc. These tools are used for both types of monetary policy.

Reserve ratio requirement:–

Money supply can also be influenced by setting the reserve ratio requirements. Banks have an obligation to keep a certain amount of deposits in the form of liquid cash, with the rest being lent out to borrowers. For instance, if the reserve ratio requirement is 30%, the bank can lend out 70%. Lower reserve requirements allow banks to lend out more funds, which leads to an increase in the money supply to the economy. Reduces reserve requirements can potentially lead to domestic currency depreciation.

Open Market Operation:–

It is a monetary policy tool that involves buying and selling government securities by Govt. body to influence the money supply and interest rates. By buying back this govt. securities, the money supply will increase in the economy, leading to a decrease in interest rates. This is known as an expansionary open market operation. By doing the opposite, the money supply will decrease, leading to an increase in interest rates. This is known as a deflationary open market operation.

Varying interest rates:–

It is a very crucial component of monetary policy. The board members of Governments have a responsibility to adjust the interest rate as per requirement. If interest rates are increased, it becomes more expensive for businesses to borrow, which leads to a decrease in the money supply in the economy.  As we are currency traders, it is required to note that an increased interest rate will cause the domestic currency to appreciate, and vice versa.

Forward guidance:-

Central banks provide forward guidance through official statements, press conferences, and publications to communicate their future monetary policy stance and intentions. Market participants closely monitor these communications as they can significantly impact exchange rates and market expectations. For example, if a central bank hints at future interest rate hikes, it may strengthen the currency in anticipation of higher yields.

It is important to continuously monitor and analyze the impact of monetary policy decisions on exchange rates to make informed decisions in the Forex market.

I hope this article is helpful for you to understand the Concept of Monetary Policy and its Influences on the Forex Market.

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Inflation and deflation are both economic terms that describe changes in the general price level of goods and services in an economy. They represent opposite movements and have different implications for the overall economy. Central banks of countries are constantly intervening (Refer to Figure – 3.1) to control inflation as well as deflation to maintain price stability.

What is Inflation?

Whenever the overall price of products and services rises, it is claimed that inflation is rising as well. It measures how much the normal rate of prices on goods and services increases over spending over a certain time. When we have too much money chasing fewer goods and services, it is a symptom of inflation. Often Central banks intervene to avoid an extreme increase in inflation, because as the cost of goods and services rises, so does the value and the purchasing power of the currency fall. That means consumers and businesses can purchase a few since the rice. All central banks of the world have a mandate to keep the inflation level at a certain level. For Forex trading commonly inflation is assessed by economic indicators such as the consumer price index (CPI) and the Producer price index (PPI).

Major Causes of Inflation:–

1. Increase in the money supply:-

If the amount of money in circulation increases faster than the production of goods and services, it can lead to inflation.

2. Demand-pull inflation:-

When aggregate demand in an economy outpaces the supply of goods and services, it can result in inflation as consumers compete for limited resources.

3. Cost-push inflation:-

If the production costs for businesses increase, they may pass on those costs to consumers in the form of higher prices, leading to inflation.

Major Effects of Inflation:–

1. Reduced purchasing power:-

As prices rise, consumers may find it more difficult to afford the same quantity of goods and services.

2. Income redistribution:–

Inflation can affect different individuals and groups in various ways, redistributing purchasing power between borrowers and lenders or between fixed-income earners and others.

3. Uncertainty:-

High inflation can create uncertainty in the economy, making it challenging for businesses and individuals to plan for the future.

What is Deflation?

Logically, deflation is the opposite of inflation it happens when prices of goods and services are falling. Deflation is when too little money is chasing too many goods and services. At times, deflationary forces can hit the labor market fairly hard by increasing the unemployment level as the overall demand in the economy decreases. On the other hand, deflation makes it more affordable to struggling consumers items such as food, fuel, and core consumable items. Deflation is less common than inflation and can have significant impacts on the economy.

Major Causes of Deflation:

1. Decrease in the money supply:-

If the money supply decreases or if there is a decrease in the velocity of money (the rate at which money circulates in the economy), it can lead to deflation.

2. Decrease in aggregate demand:-

When consumer spending declines, businesses may lower prices to stimulate demand, resulting in deflation.

3. Technological advancements:-

Rapid advancements in technology can lead to increased productivity and lower production costs, causing prices to fall.

Major Effects of Deflation:–

1. Increased purchasing power:–

Falling prices mean that consumers can buy more goods and services with the same amount of money.

2. Delayed spending:–

When consumers expect prices to continue falling, they may delay purchases, leading to reduced demand and potentially harming the economy.

It’s important to know that moderate inflation is generally considered desirable for economic health, as it indicates a growing economy. On the other hand, deflation can be a sign of economic slowdown or recession and is often seen as undesirable.

I hope this article is helpful for you to understand Inflation and deflation in the economy.

Stay tuned to our website for more tutorials about Forex Market. If you have any suggestions or queries, feel free to Contact us or drop your message in the comment section below.

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Hundreds of candlestick patterns are used by the traders in trading industry. But it is not possible to remember the entire pattern and also it confused you. That’s why we picked up only nineteen patterns of the candlestick for you, and believe it is more than enough to have a solid understanding of candlestick formations and their meaning. Let’s learn about these Important Candlestick patterns and their impacts.

Doji Candle:–

It is a neutral pattern. A Doji has a small real body, indicating that the opening and closing prices are very close or virtually the same. That’s why it is known as the indecision candle. This candle can appear in several different patterns. Refer to Figure -2.1 for visualization.

Gravestone Doji:–

It is a bearish pattern. This candle signifies another turning point. It occurs when the open, close, and low are the same and the high is significantly higher than the open, low, and closing prices. Refer to Figure -2.2 for visualization.

Double Doji:–

It is a neutral pattern. The double Doji pattern is formed when two consecutive Doji appears in the same price range. This implies a forceful move will follow a breakout from the current indecision. Refer to Figure -2.3 for visualization.

Star:–

It is a bearish pattern. Stars indicate reversals. A star is a candle with a small real body that occurs after a candle with a much larger real body. Where the real bodies do not overlap, although the wicks may overlap. Refer to Figure -2.4 for visualization.

Spinning Top:–

These are Neutral candles. They occur when the distance between the high and the low, and the distance between the open and the close are relatively small. Refer to Figure -2.5 for visualization.

Harami Candles:–

These are neutral patterns. This pattern indicates a decrease in momentum. It occurs when a candle with a small body falls within the area of a larger body. As you can see in Figure-2.6 a bullish candle with a long body is followed by a weak bearish candle and implies a decrease in the bullish momentum.

Dark cloud cover:–

This is a bearish pattern. This is more significant if the second candle’s body is below the center of the previous candles’s body as you can see in Figure- 2.7

Bearish Engulfing Candles:–

This is a bearish pattern. This pattern is strong and bearish if it occurs after a significant uptrend. This pattern acts as a reversal pattern. It occurs when a small bullish candle is engulfed by a large bearish candle. Refer to Figure -2.8 for visualization.

Evening star:–

This is a bearish pattern signifying a potential top. This evening star indicates a possible reversal and the bearish candle confirms it. The evening star can be green or red or it can be a Doji star. Refer to Figure -2.9 for visualization.

Doji star:–

This is a bearish pattern. A star indicates a reversal and a Doji indicates indecision. Thus, this pattern usually indicates a reversal after an indecisive period.  You should wait for a confirmation, such as an evening star illustration, before trading a Doji star. Refer to Figure -2.10 for visualization.

Shooting star:–

This is a bearish pattern. This pattern suggests a minor reversal when it appears after a rally. The star’s body must appear near the low price, and the candle should have a long upper shadow. Refer to Figure -2.11 for visualization.

Long legged Doji:–

This is a bearish pattern. This candle often signifies a turning point. It occurs when the open and close are the same, and the range between the high and the low is relatively large. Refer to Figure -2.12 for visualization.

Dragonfly Doji:–

This is a bearish pattern. This candle also signifies a turning point. This pattern occurs when the open and close are the same and the low is significantly lower than the open, high, and closing prices. Refer to Figure -2.13 for visualization.

Hammer:–

This is a bullish candle if it occurs after a significant downtrend. If the candle occurs after a significant uptrend.it is called a hanging man. A hammer is identified by a small body (a small range between the open and closing price) and a long lower shadow (the low is significantly lower than the open, high, and closes). The body can be red or green. Refer to Figure -2.14 for visualization.

Piercing Candle:–

This is a bullish pattern and the opposite of a dark cloud cover. The first candle on the left is a bearish candle, and the second candle is a bullish candle. The second candle opens lower than the first candle’s low but closes more than halfway above the first candle’s real body. Refer to Figure -2.15 for visualization.

Bullish engulfing candles:–

This pattern is strongly bullish if it occurs after a significant downward rally. This pattern acts as a reversal pattern. It occurs when a small bearish candle is engulfed by a large bullish candle. Refer to Figure -2.16 for visualization.

Morning star:–

This is a bullish pattern signifying a potential bottom, the star, at the bottom between the two candles, indicates a possible reversal. The bullish candle confirms this reversal. The star can be red or green. Refer to Figure -2.17 for visualization.

Bullish Doji star:–

This is a bullish pattern. A star indicates a reversal and a Doji indicates indecision. Thus, this pattern usually indicates a reversal after an indecisive period. You should wait for a confirmation, as in the morning star in the previous pattern, before trade execution on the Doji star. The first candle can be red or green, it does not matter. Refer to Figure -2.18 for visualization.

Hanging man:–

These candles are bearish if they occur after a significant uptrend. And if the pattern occurs after a significant downtrend it is called a hammer pattern. These candles are identified by small real bodies (A small range between open and closing price) and long lower wick. That is, the low was significantly lower than the open, high, and close. The bodies can be red or green, it doesn’t matter. Refer to Figure -2.19 for visualization.

It’s important to note that while candlestick patterns can provide insights, they are not foolproof indicators and should be used in conjunction with other technical analysis tools and risk management strategies. It is better to have multiple confluences with the above candlestick patterns for getting an extra edge on your trading.

I hope this article is helpful for you to understand the Important Candlestick Patterns and their impacts.

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As the momentum of business activity fluctuates, the business cycle in the world economy also changes. As a Forex trader, your job is to understand the Basic Concept of Economic Expansion and recession and recognize each economy worldwide, and where their cycle is going.

An economic cycle is divided into two cycles. These cycles create a “risk-on” and “risk-off” market environment based on which investors allocate their money.

• Economic expansion cycle
• Economic recession cycle

Economic expansion cycle:–

Expansions refer to a strong and growing economy. It is a phase of the business cycle characterized by increasing economic activity and growth in a country’s overall output of goods and services. It is often associated with positive trends in indicators such as gross domestic product (GDP), employment rates, consumer spending, business investment, and rising stock markets. When a country’s gross domestic product goes up over a specific period of time, it is viewed as, having an economic expansion. Economic growth takes place either as a natural process or through Govt. interference.

To create demand or to add money to a financial system, the central bank of the country purchases Bonds in the open market. By that, it swaps bonds for cash that investors put into commercial banks. For that, commercial banks are more able to lend out this excess of money at low-interest rates.  Due to the low-interest rates of loans, it is more affordable for small companies and big corporations, an opportunity to increase their business activities. For example, purchase manufacturing plants and high-tech equipment, and hire more manpower, so they can produce more goods and services.

To create supply, the central bank of countries can change its Reserve requirements or lower interest rates, by which taking money out of the financial system. Interest rate manipulation is a key tool central banks use for managing the economic cycle.

Key Features of an Expansion Cycle:-

The below features of an expansion cycle you must remember.

• Rising employment
• Higher disposal income
• The demand for Household goods rises
• Consumer spending increases
• Rising sales
• Production increases
• Healthy wages

Economic recession cycle:–

An economic recession is a period of significant economic decline, typically characterized by a contraction in GDP for a couple of quarters, widespread job losses, reduced consumer spending, and declining business activity. The recession affects the following areas of the economy:

The stock market, the Labor market, the housing market, and many more.

In this type of environment, cash supply starts to diminish as consumers limit their spending and businesses restrict their funding. It is natural that lower funding by businesses results in higher unemployment.

Generally, the recession is not good; however, it is not as extreme as the depression. Depression is considered if a recession lasts for a long time.

Features of the Recession Cycle:-

The below features of a recession cycle you must remember.

• Companies eventually fire
• Lower disposal income
• Demand for goods is decreasing
• Business cut their production
• Higher unemployment rates
• Very less wages.

To address a recession, governments and central banks often employ expansionary fiscal and monetary policies. These measures can include reducing interest rates, implementing stimulus packages, increasing government spending, and providing support to affected industries. The aim is to boost economic activity, restore confidence, and stimulate spending to bring the economy out of the recessionary phase.

I hope this article is helpful for you to understand the Basic Concept of Economic Expansion and Recession.

Stay tuned to our website for more tutorials about Forex Market. If you have any suggestions or queries, feel free to Contact us or drop your message in the comment section below.

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Most beginner traders simply look at candlestick charts because Japanese candlesticks are easy to understand rather than line charts or bar charts. The numbers written on the right side of the chart indicate the price of the respective asset. The numbers at the bottom of the chart indicate the period. The very last candle to the right is the current candle, indicating the current market price. All the previous candles, to the left of the current candle, have recorded historic price movement during that time frame. Look the Figure-1.1 below for reference.

Understand  the Highs on the chart:

Highs are defined as a level where the market ceases to rally and U-turns in the opposite direction. You can spot a high between four candles when the two to the left and the two to the right are lower than the center wick, which is the highest. A high can be considered a new level of resistance, or a higher price level achieved by the bulls that is interrupted and reversed by the bears. Remember, not all highs are major levels of resistance. We will discuss resistance deeply later on. Now look the Figure-1.2 as I marked resistance on high.

The levels of resistance market in the above chart as res-1, res-2 ….  Will become future price targets for the bulls to chase and move higher. When the bulls regain control of the market, they will aim to make higher highs and higher lows. The bears are kept in control in the above chart as the market is making lower lows and lower highs.

Understand the Lows on the chart:

A low is defined as the level where the market ceases to drop. you can see a low candlestick formation where there are two candles to the left and two candles to the right that are higher than the center wick, which is the lowest point. A low can be considered as a new level of support or a lower price level that was achieved by the bears and then interrupted and reversed by the bulls. you can consider a low as support. Remember, not all Lows are major levels of Support. We will discuss Support more deeply later on. Now look the Figure-1.3 as I marked supports on lows.

The levels of support noted in the above chart as sup-1, Sup-2, Sup-3 …. Will become future price targets for the bears to chase and move higher. When the bears regain control of the market, they will aim to make Lower highs and Lower lows. The bulls are kept in control in the above chart as the market is making higher lows and higher highs.

Conclusion:

Candlestick patterns gain more significance when observed in the context of preceding and subsequent candlesticks. Traders often analyze multiple candles to identify trends, and support/resistance levels. Remember that reading candlestick charts requires practice and experience. It’s essential to continually educate yourself on candlestick patterns and technical analysis concepts to become proficient in using them for Forex trading.

I hope this article is helpful for you to understand how to read candlesticks on the chart.

Stay tuned to our website for more tutorials about Forex Market. If you have any suggestions or queries, feel free to Contact us or drop your message in the comment section below.

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Now we start the boring stuff that nobody wants to learn simply because maximum retail traders think that this subject is too complicated and needs an economic degree to understand. If you have faith in us, we are going to simplify the subject and focus on what matters in Forex markets more. The fundamentals could be as difficult as you wanted them to be, so you do not need to be making this subject more complicated, which is not. Another truth is, this is the stuff that the majority of the trader are ignoring, resulting statistically majority of retail traders loose in the Forex market.

Yes, it is hard to wrap your head around some fundamental concepts and the skeleton of fundamentals. Even if you grab these concepts, you will change the way you look at the Forex market forever. There are two types of fundamental analysis as mentioned below:

1. Macro fundamental analysis.
2. Micro fundamental analysis.

Macro fundamental analysis:

Macro Fundamental analysis centers on broad economic factors that impact the Forex market altogether. The concept of the Macro Fundamental analysis begins with the overall assessment of the economy. Then it moves to analyze its effects on sectors and down to specific trading assets in the Forex market. You have to top-down approach for Macro fundamental analysis and it consists of the Employment of the country, the inflation rate of the country, the GDP growth of the country as well as numerous mixture of other economic activities.

Things that move the Forex market on a large scale are known as Macro events. Here are some Macro events listed below for understanding and we will learn all that events deeply later on.

Micro fundamental analysis:–

Micro fundamental analysis is an examination of certain behaviors and economic patterns that trigger events leading to economic activity. For example, it analyses economic releases, corporate actions, social policies, New headlines, and a lot more. Simply put micro fundamentals tries to forecast economic trends, which could possibly influence the price of a respective currency pair instantly.

Micro events are, what make the Forex market “tick” on a daily basis. Here are some Micro events listed below for understanding and we will learn all those events deeply later on.

Success in the Forex market requires continuous learning, practice, and experience. You should also consider utilizing reputable sources and staying updated with current events, Macro events,  Micro events, and Geo-Political events.

I hope this article is helpful for you to understand the Skeleton of fundamentals.

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It is not enough to learn about economic indicators when you are trading in the Forex market. Before you get into the market moving indicators, it is important to understand the mandates of the different worldwide central banks and their roles. Worldwide central banks will impact the currency you are trading because they will tremendously impact the sentiment just with a change of interest rate decision or monetary policy decision or any central bank intervention to the Forex market.

You will lose money in the long term if you skip learning about any important currency market drivers. So you have to learn all the fundamental facts around the world. I know it is not very simple, and that’s why most retail traders are ignoring this stuff of trading. Believe us if you take a keen interest in it we are there to make you a successful trader and you will definitely become a master of fundamental analysis along with technical analysis.

While different central banks have different mandates, they have a couple of functions in common. Central banks are known as the lenders of last resort. Because aside from being responsible for regulating the country’s money supply through monetary policy tools, they can lend money to commercial banks, especially during financial crises or tight banking conditions.

In the world of central banks, there is a certain phrase that is commonly used to describe the actions of central bankers and their outlook for interest. There are a few examples below:

Hawkish:–

Central bank’s bias toward increasing interest rates due to the country’s economy growing too fast or inflation rising or the need to hike the value of domestic currency etc. Remember these all economic indicators are linked to each other by the way.

Dovish:–

Central bank’s bias towards cutting interest rates due to the concern that the economy is slowing down too fast or deflation is rising or the need to decrease the value of domestic currency etc.

Central Bank Intervention:–

Action taken by central banks to induce movement in currency rates is known as central bank intervention. For export-driven countries, their central banks will intervene more often to keep exports competitive.

Now I discuss below several central banks in the world which is much effective for the Forex market:

U.S Federal Reserve (Fed):–

Currency: USD

The federal reserve, in short, the Fed is the central bank of the united states. The FOMC (Federal Open Market Committee) Fed funds rate should be taken note of, especially for traders who are trading the USD pairs. FOMC comprises 12 members and has the right to determine the interest rate of the USA.

The Fed’s key mandate is to ensure maximum employment and maintain inflation rates at 2% and maintain economic growth at a desirable rate. The Fed is also responsible determine the reserve ratio required to be held by banks. The Fed is closely monitored by traders since the USD is the main reserve currency in the world.

Bank of Japan (BOJ):–

Currency: JPY

The Bank of Japan is responsible for ensuring the financial stability of the Japanese economy and the policy board is responsible for setting interest rates.

Since Japan is an export-driven country, it is against the Bank of Japan’s interest for the Yen to strengthen too much. Hence, intervention by BOJ is more often compared to the other central banks to prevent the yen from becoming too expensive.

European central bank (ECB):–

Currency: EUR

The ECB is the central bank of the 19 members of the European Union countries. This central bank’s mandate is to maintain a stable inflation rate of 2% and ensure currency stability.

You need to take note of the monetary policy decisions made by the bank governing council, which is responsible for set refinancing operation rates, marginal lending facility rates, and deposit facility rates.

Swiss National Bank (SNB):–

Currency; CHF

Switzerland’s central bank is responsible for the CHF, and it mandates it to maintain economic growth and price stability and inflation rates to 2%. The 3-month LIBOR market is used to determine interest rates.

The SNB also oversees the financial market infrastructures as a strategy to promote financial stability.

These are just a few examples of central banks and their roles in the Forex market. Other central banks, such as the Bank of Canada (BOC), Bank of England (BOE), the Reserve Bank of New Zealand (RBNZ), and Reserve Bank of Australia (RBA,) also play significant roles in their respective economies and impact their respective currencies in the Forex market. Hence you also need to focus on other central banks’ activity too.

I hope this article is helpful for you to understand Worldwide Central Banks and their roles.

Stay tuned to our website for more tutorials about Forex Market. If you have any suggestions or queries, feel free to Contact us or drop your message in the comment section below.

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Candlestick formations are the sign language of the market. They frequently tell you the probability of price movement. There are three types of charts traders can refer to a line chart, a bar chart, and a candlestick chart. In the recent era of trading the line chart and bar chart are not used by traders most. Now even the world’s top traders are using Japanese candlestick charts for the additional information they can provide.

It was in 1600 that the concept of the Japanese candlestick was explored, tested, and used in monitoring prices in the rice market of Japan. After the lapse of a few decades candlestick charts are now included in the majority of financial carting packages as a slandered option and are a key indicator for establishing a method of price and analysis.

How to read a Japanese candlestick?

Japanese candlestick charts monitor price movement during a certain period of time. As the candlesticks form, they begin to tell a story of the activity in the market, as well as reflect the mood of the marker during that time. Candlestick patterns are always telling you the future probability of price in the Forex market. Successful traders take time to study and understand this casual language. Candlestick formations indicate clear buy and sell signals, communicating to the trader when it is time to enter the market or to get out. They will appear in the form of a single candlestick or a combination of more than one candlestick.

Let us see what a Japanese candlestick looks like and how it forms:

Candlesticks, which are composed of full bodies and wicks, measure price fluctuations within a certain period of time as prices move up or down from the opening, the body begins to form. If from the opening price, prices move up and then close higher than the opening, it is a bullish candle. These candlesticks will always appear in white or green color.

If prices begin to fall from the opening price and close lower than the opening, it is a bearish candle. These candlesticks will always appear to be black or red – which indicates their bearish nature. The lines on the upper side and lower sides of the bodies of the candles are called wicks of shadow. The upper wicks of the candles indicate the highest price high, and the lower wicks of the candles indicate the lowest price or low of that time period.

Monitoring Price movement with Candlestick:-

For example, there are multiple time frames in your chart like 5 Min, 15 Min, 1 hr, 4 hr, Daily, Weekly, Monthly, etc. Candlesticks monitor price movement against time, providing traders with four key prices of information for that specific time period that you selected in your chart. 

• The opening price
• The closing price
• The highest price reached
• The lowest price reached

Forex trading is a financial game involving two opponents: the bulls and bears. Forex traders around the world, have been trading either in a bullish direction or in a bearish direction. Both sides have clear objectives and want the marker to move in their direction: bulls want the market to go up, or rally, to make higher highs, whereas the bears want to take the market down, or have it deep to make lower lows.

I hope this article is helpful for you to understand Japanese Candlesticks.

Stay tuned to our website for more tutorials about Forex Market. If you have any suggestions or queries, feel free to Contact us or drop your message in the comment section below.

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Technical analysis is a methodology used by traders and investors to analyze and predict the price movements in Forex markets. It involves the study of historical price data, volume, Candlestick patterns, price action, market trends, and other technical indicators to provide insights into future price movements. But do not think that technical analysis is everything for trading in the Forex market. Yet if you think so, you will understand that one day after blowing your account.

Another truth of this market is any good strategy will not work for all traders. So make your strategy by yourself. Let me give you a real-life example, I am a good cook. So my neighbors and friends are always requesting me to give my secret recipes. And I always gave them my recipes and they try to cook dishes like me. You know what, none of those people who took my recipe could prepare dishes as identical as I do.

They all use the same ingredients and even the same brand! Yet all of them produce different results. The fact is “It is not what ingredients I use that matter. It is how they use it that matter. This applies to trading too. You and I can use the same technical indicators but yet produce different results.

Various types of Tools and Indicators for Forex technical analysis

By analyzing charts and using various tools and indicators, technical analysts attempt to identify potential entry and exit points for trades and make predictions about future price direction. Here are some key concepts and tools commonly used in Forex technical analysis, which will be discussed deeply in future articles.

I hope this article is helpful for you to understand the Introduction To Technical Analysis.

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What is fundamental analysis?

Fundamental analysis is a method used to evaluate and analyze the intrinsic value of a financial instrument, such as a currency pair in the Forex market. It involves examining various economic, financial, and geopolitical factors that can influence the value of a currency. By understanding these factors, traders and investors can make decisions about buying or selling currencies based on their analysis of the fundamental data.

Before going into a deep study, I have a question for you all, why should you need fundamental analysis? I hope there are several answers you have. Let’s look at why we care about fundamentals for Forex trading:

If you are purely dependent on only technical analysis and you have an open position now and then assume that the Fed decides to cut the rate or hike the rate all of a sudden. What will happen? Immediately the price can move 100-200 pips against you within a few minutes and you will stop out. Especially in today’s market environment, you will find that you will get stopped out very frequently even if you have a great technical strategy.

Various economic fundamentals drive the Forex markets in the long term and determine the overall direction of the trend. This is what hedge fund traders and smart money traders focus more on. The most professional successful traders involve fundamental analysis 70%  and 30% technical analysis for trade execution. Yet, a lot of retail traders only read about technical indicators and watch technical analysis videos. And I think that is the reason most of them lose.

Key Elements of Fundamental Analysis in Forex:-

Here are some key elements of fundamental analysis in Forex that we all discuss in future articles:

• Economic indicators
• Central bank policies
• Geopolitical factors
• Market sentiment
• Intermarket Analysis

If you want to become a successful and consistently profitable trader, the first step you need to take is to master fundamental analysis even if you are an intraday trader. You do believe we are here to make you a successful trader in all aspects. 

I hope this article is helpful for you to understand the Introduction of Fundamental Analysis.

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