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Forex cycles. Cyclical trends in the market.
The price movement in the Forex market can not be considered chaotic that it has been observed by many traders. There are certain patterns, recurring events, which you can use to your advantage. In other words, the market can be divided into cycles, thereby predicting the future behavior of prices.
Forex cycles become the basis for entire areas of trading, such as candlestick analysis. Thousands of people base their trading on the Forex market namely the cyclicality of the market, however, taking different periods. It is customary to distinguish two types of cycles that are not limited time frame.
Here are the most common on the market types of cycles:
Seasonal - depending on the season, appear certain features of the market. This can be a significant change in the volatility, the presence or absence of a sharp long-lasting price movements and so on. Some traders can avoid some of the seasons such as summer, as their trade is more suitable for a more active market.
Monthly cycle - monthly large financial structures approximately at the same time carry out large commercial transactions. Some organizations require, for example, in a particular currency until the end of the month, others just record profits. Naturally, such factors affect the market.
Week short - term cycle, which can also be determined some peculiarities in the behavior of market prices. On Monday it may be a quiet market, when traders from different countries analyze the situation and examine the actions of large players. On Friday, especially in the second half of the day, this time recording the results, when you can see increased activity in the trade.
Wave - cyclicity can be not only temporary but also limited to certain events as a reversal of the trend. All wave analysis is devoted to the definition of waves and change them. This direction is often used by traders in the Forex market, which constantly evaluate, in accordance with the terms of the theory, the current situation, under which conditions it will change.
Day - every day in Forex there is a change of trading sessions of European, US, Asian countries. Every day there is a change of markets, and therefore, you can observe the manifestation of the features of each session. So, for example, the Asian market is the most calm, and during the work sites in the United States, you can observe the reverse situation with strong trends. Due to the fact that the change in trading sessions happening every day, we can say about cycles.
Cycles in Forex are not meant to rely on them in making decisions during trading. Rather, they are used as filters, that would be in advance to understand what should be guided in their work on Forex. Depending on the trading style of the trader are taken into account the various periods.
In the process of day trading people will pay attention primarily on the daily cycles, and for medium-term transactions are more relevant will appear weekly. A lot depends on the way to work in the currency market.
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| Category: Forex | Added by: (06.11.2017)
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| Views: 579
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