Business, Financial & Forex news

How to determine the trend in Forex?

The whole game on Forex is formed depending on the price movement. The success of any game depends on how the player handles the trend. The concept of “trend” includes a purposeful price movement in one direction. If the price goes up, there is a bullish trend, in case of a fall, a bearish trend is analyzed. And it is not so important, that there is a long-term or short-term game. In any case, the determination of the price trend, the pattern of the whole process remains constant. The trend movements are influenced by many external factors, which are quite difficult to observe, so only a few factors are selected and analyzed from the whole variety. The analysis of the dynamics of the whole picture of the trend is a professional analysts of the financial exchanges, moreover, often the influence of some is quite small. The most significant are government, gossip, expectations, international events, supply and demand.

How to determine the trend using the main driving forces

Constant monitoring of the trend helps to understand how certain events affect the dynamics of the price movement. Analysis of the trends helps to predict the future trend definition. And this, in turn, contributes to the successful exchange enrichment. How do the most effective factors, how to determine the trend at the same time?

The most important factor is the government. The policy of one country’s government can have a very big impact on the dynamics of free markets. By raising or lowering interest rates, the government regulates the monetary system, slows down or Vice versa accelerates economic development. And by reducing or increasing spending, which in most cases relates to social policy, the government establishes its fiscal policy. Such an important issue of foreign economic policy as an investment also largely depends on the decisions of the government. Therefore, the government makes more than 90% of forecasts in determining the trend. The basic tenets of fundamental analysis are inextricably linked to government policy.

International developments are more concerned with the inflow and outflow of fixed capital. Any trader understands that the more the export of goods from the state, the greater the flow of money, and, consequently, the better the economic condition. The greater the outflow of money, the weaker the state. Based on seemingly simple statements, you can easily solve the question of how to determine the trend of any currency.

The predicted price movement is strongly influenced by rumours and expectations. Economic events occur on the basis of today’s conditions. Usually the definition of a trend using the current gossip that occurs with indicators of sentiment. As you know, most indicators participate in a positive forecast of about 90% of successful transactions.

A kind of surge in prices causes supply and demand. As in any economic issue, supply and demand are the main engines of relations. The demand increases, the price rises. Demand remains unchanged, but supply increases, therefore, the price decreases. Skilful use of the main factors affecting the stock market can be a guarantee of a successful answer to the question of how to determine the trend.
Moments of difference in determining the trend in the long and short-term

All of the above factors help to understand how to determine the trend at any time period. However, an important aspect is to understand how all external factors can be combined at the same time. Despite the fact that they are quite different, they are harmoniously combined. Government policies affecting foreign trade, handling export and import, and supply and demand determine the government’s decision.

The announcement of government resolutions in the financial policy of the state has a strong impact on long-term trends. The reduction of taxes leads to higher prices, economic growth, the reverse trend stimulates a decrease in prices. However, such publications cause fluctuations in short-term trends. Focusing on the news, investors and traders make lightning-fast actions, causing market fluctuations in the short term, because how to determine the trend in one day, only a spontaneous decision. At the same time, traders and investors make informed decisions on long-term periods, assessing the latest decisions of the government and determining what impact these decisions will have on the market in the future.

International relations due to the specifics is

How to determine the trend under the main law of the economy

The ratio of supply and demand is at the heart of all economic relations. And then the question arises how to determine the trend, which is dependent on supply and demand. Supply and demand have a significant impact on the market. It is under the influence of these key definitions that traders make their transactions and investors make decisions. All activities of financial markets are based on this key point. In the case of commodity markets, supply is determined by the commodity. Depending on how the supply or demand behaves, the market price is determined. Suppliers of goods hope to get a higher price for their goods, and buyers are trying to lower it. High demand leads to higher prices. The trend is determined by the current supply and demand. For short-term periods, there is discontinuous price behaviour due to the threat of depletion or supersaturation of the proposal. Almost all time periods show the same pattern. The greater the supply, the lower the price, the lower the demand, and Vice versa, the greater the demand, the higher the price, the smaller the supply. The tendency of balance almost never comes. Simply because it is a market that carries either losses or profits.

Thus, the answer to the question of how to determine the trend in any financial market can be obtained by determining the four main components of external factors:

International transactions;
Expectations and gossip or rumours;
Supply and demand.

Each of these factors has an impact on how to determine the trend in any period of market movement. It would seem that all four factors are very different, however, they are perfectly combined with each other. Moreover, they are strongly interconnected. The change of one leads to the change of another factor. The strongest effect is supply and demand. This factor affects all aspects of financial markets.

very difficult to measure in day-to-day markets, however, they are very characteristically manifest long-term markets. Moreover, the foreign exchange market depends on the price value of the country’s currency in relation to other currencies. As a stimulus to action is the information that comes as a result of actions taken by the government. An expectation is created where the market will go under the influence of events. When organizing a group of coinciding opinions, a trend is created that can be observed for a long time. The trend is determined by all market participants. Both positive and negative. Because without getting a profit participants out of the game, thereby stimulating movement in the same direction. As soon as there is a tendency of oversaturation on the trend, the price movement turns to short or long moments.