Forex trend forecasting.
The entire process of trading on the Forex currency market is divided into two main components, the first of which is market analysis, and the second is forecasting the further behavior of the trend.
It is these two stages that are the basis for conducting successful transactions, so you cannot consider each of them separately, since without analysis it is impossible to make an accurate forecast, and without forecasting it is impossible to open a successful transaction.
Forex trend forecasting is classified depending on the time period of trading and the planned duration of the transaction.
In short-term trading , the entire forecasting process comes down to simply identifying patterns, since long-term forecasting on short time frames does not make much sense.
For this reason, we first conduct a visual analysis of the existing trend, identify its direction and determine the type of movement.
A trend can move within a price channel or chaotically. Based on the data obtained, we build a forecast and plan the most successful entry point into the market. In medium-term trading - in this case, technical analysis and, accordingly, the preparation of the forecast itself will take more time; technical analysis indicators can already be used as assistants.
Trend forecasting is carried out in the same way as in the previous case. The only difference is that for a more accurate forecast, the influence of fundamental factors should be taken into account. It is almost impossible to predict how the price will behave when this or that news is released, but these times can be marked as points of a possible trend reversal.
Long-term trend forecasting is a rather complex process, since seasonal price fluctuations are added to the factors listed in the previous options.
For example, you make a forecast of what the price of oil will be in November of this year; it is known that at this time energy prices always go up. Therefore, you should take this into account and correct the existing trend. Forecasting has always raised a lot of questions for novice traders, but if you wish, you can try to simplify this process to a minimum.
I will try to answer this question using my own example.
Usually, when I launch a trader’s trading terminal, I study the chart of my favorite currency pair and look for patterns in its behavior. And if there are any, for example fluctuations in the price channel, then an order is placed in the most favorable place for this. In the same case, if market analysis shows an absolute absence of Forex patterns , I simply postpone trading and wait for a more convenient moment.