There are two types of analyzing forex movements. There’s fundamental and technical analysis. Some traders prefer the technical while others the fundamental. There’s no sense arguing which is better. The choice depends on which the trader thinks can help him earn money from forex trading. The best naturally will be the combination of the two.
For traders who rely on fundamental analysis to predict currency movements, forex news offer good opportunities for setting-up potentially profitable trades. The market usually reacts to certain news like new trade and political policies or actions of countries currencies are frequently traded. News of economic situations as well as disasters has virtually the same effect on the market. Predicting what direction currencies affected will go as a result of the news is not a very easy task though once patterns are detected; currencies will react certain ways to certain news, things get a little bit easier. The general rule is that events that tend to weaken the economy of a country tend to also weaken the currency.
The funny thing about fundamental analysis is that traders are actually tracking the reaction of others traders to the news. Traders will react this way or that depending on how they interpret the news. It will be good to be always to be able to tell where other traders will go practically determining where the currencies will end up. This is not easy of course but there are ways to detect currency movement patterns after every news forex news releases.
Using forex software providing detailed historical data of daily market movements, one can tell what effects the news had on the market and how his fellow traders read the news. Fundamental analysis allows a trader to detect patterns in forex movements after forex news releases and is an effective method of developing appropriate forex trading strategies.
KC Yap is an author who likes to write about all interesting events in the world