The EUR / USD is now down. Understand what’s behind this statement and what kind of tests to do before entering the currency market.

The U.S. dollar is strong against the euro at the opening of the day today. It seems that the market is cautious before the rate decision today that will reveal Federal Reserve, And Bernanke’s speech later, which is expected to treat the subject of a future Quatitative Easing. Thus, in the European opening the euro has fallen by 0.02% to 1.3034.

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To know how to interpret this data in the foreign exchange market or forex . It is necessary for an analysis of several variables. One of the biggest mistakes that can be made to penetrate this market is open position without being sufficiently prepared. Within this preparation is essential to make a good analysis of the market in general and the pair on which the opera in particular.

Types of analysis in forex

The analysis can be classified into three general categories: technical analysis, fundamental analysis and sentiment analysis on the market.

Technical Analysis

Technical analysis is to examine the evolution of prices of different currency pairs and compare price movements in the historical force. In theory, the trend may be repeated, so that information generated by price movements in the past? May indicate future market movement. One of the advantages of technical analysis is that it is based on previous data, can be automated. And many online trading platforms, including graphics packages that help identify patterns in price movements and determine whether there are trends that are repeated over several periods.

Fundamental Analysis

Fundamental analysis is to study the markets and how they respond to economic, political and social. Usually, if socioeconomic variables increase the demand for a currency, that currency will rise. Similarly, if demand falls, so does its value. The trading based on fundamental analysis includes the study of the interest rate announcement, elections, or the employment figures of a nation.

Analysis on market sentiment

This analysis examines the feeling that exists with respect to the market. If most participants have a positive feeling, market sentiment is bullish whereas if the general sentiment is negative, it is bearish. This type of analysis is relevant because it is questioning the attitude of market participants to risk. When dealing with invest in foreign currency, most successful traders use a combination of different types of analysis mentioned. Fundamental analysis can be good for determining the general market trend, while technical analysis is useful for selecting points of entry and exit, and sentiment analysis can indicate the stability that a trend may have.