Trend Analysis Analysis can seem like an ambiguous concept to a new forex trader. But it actually falls into three basic types. Fundamental Analysis: often used to analyze changes in the forex market by monitoring figures, such as interest rates, unemployment rates, gross domestic product (GDP), and other types of economic data that come out of countries. Technical Analysis: can take the form of both manual and automated systems. A manual system typically means a trader is analyzing technical indicators and interpreting that data into a buy or sell decision. An automated trading analysis means that the trader is "teaching" the software to look for certain signals and interpret them into executing buy or sell decisions. Weekend Analysis: It enables traders to establish a "big picture" view of a particular market they are interested. Besides, weekend analysis will help you to set up your trading plans for the coming week. Prompt Which analysis do you rely on the most? Disclose how your forex system uses past price movements to determine where a given currency may be headed
I’ll share what I use. I use objective analysis: Something that can be applied irrespective of time frames and asset classes. Based on the underlying movement of price as opposed to its derivative (i.e. not specific price and bar patterns). Based on the fundamental principles of why price moves like it does (as opposed to merely trading the derivatives of price patterns without this knowledge). Something that can generate multiple trade opportunities per day / week. Something capable of producing good average risk/reward and trades according to expectancies. It consists of supply and analysis, order flow analysis, pure price action, and most importantly the ‘Right’ Mindset Approach. And just like everyone else, I stuff it up from time to time.
I look on the higher timeframe, at the three previous swing highs and lows to determine the long term trend. I look at the higher timeframe to see whether the dominant candle is bullish or bearish to determine the immediate trend. I look for reversal on the main timeframe in the direction of the long term + immediate trend for signals. Reversal is an all weather strategy. Breakout doesn’t work when selling volatility. Mean reversion doesn’t when buying volatility. Most important is immediate trend. That’s where the tape is going. Never never never fight it. Actually reversal doesn’t work in low volatility environment.