With interest rates dictating the rate of return for holding assets denominated in the local currency, forex traders also pay special attention to interest rate differences when it comes to keeping their positions open for a long time. This is because the interest rate difference is carried on when a forex position is kept open … Continue reading Taking Advantage of Carry Trade
Another useful tool in fundamental analysis is using the U.S. dollar index or USDX for short. This keeps track of the dollar’s performance against a basket of currencies. Included in this basket of currencies are the euro, yen, pound, Canadian dollar, Swedish krona, and Swiss franc. Aside from providing a general direction of dollar behavior, … Continue reading Using the Dollar Index
One of the most basic foundations of technical analysis is watching price charts. There are three popular types of charts used by forex traders and these are line charts, bar or open-high-low-close charts, and candlestick charts. The line chart is the simplest among the three, with a price line connecting one closing price to the next. This … Continue reading Types of Charts
Candlestick charting originated around the 17th century among Japanese rice traders. Munehisa Homma developed this methodology to monitor daily changes in the prices of rice in order to help him make better decisions when it comes to buying or selling the commodity. These methods were eventually compiled and improved on by the more popularly known … Continue reading Japanese Candlestick Basics
Single candlestick patterns are perhaps one of the most straightforward ways of reading price action and interpreting market psychology. Candlesticks with long bodies and short wicks signify strong buying or selling momentum that is likely to carry on until a reversal candlestick is formed. Meanwhile, candlesticks with long wicks and short bodies can either reflect … Continue reading Common Candlestick Formations
