Monday, August 21, 2017

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FOREX TRADING STRATEGIES

 

Forex Signals For Fundamental Traders

A couple of months ago, we published an article explaining why traders that employ the scalping technique need forex signals. As we know, scalpers trade from very small time frame charts, such as 1-minute, 2-minute or 5-minute charts - and these often paint contradictory pictures. That leaves the scalpers puzzled and unsure which direction the price will go next, and very often they have to stay out of the market, especially when the volatility is high. This is why forex signals is a great help for them when supplied by another source. They also offer a helping hand for the fundamental trades, as these type of traders base their trading method on the economic data releases and other fundamental events… however, sometimes the price doesn´t fall in line with that. So, this is why our signals can be of great assistance.

Technical and scalping forex signals offer a helping hand to a fundamental trader
Technical and scalping forex signals offer a helping hand to a fundamental trader

  • Technical forex signals – On our team of analysts we have ‘market’ analysts who specialize in technical analysis. In the long term, the fundamental outlook is what sets the direction of a currency or a forex pair, but in the shorter term technical indicators drive the market around. These analysts use indicators such as: support and resistance levels, trend lines and channels, moving averages, as well as overbought and oversold levels which are defined by the stochastic, and RSI indicators etc.  So, the technical analysis gives us another point of view of the market. Therefore, you can use the forex signals based on a this as a confirmation if they pair up with your fundamental analysis. You can also simply re-evaluate your fundamental analysis for a certain pair if the technical forex signals contradicts your technical analysis.

 

  • Lack of fundamental events – There are times when there are no fundamental events or economic data to drive the market around - or there are scarce events like the last two weeks of 2015 and the first two weeks of 2016. During these periods the fundamental traders cannot trade. But, the market keeps moving nonetheless and there are plenty of pips to be made, so for fundamental traders these are just lost opportunities. Technical traders shine during these periods because there are no fundamental events or economic data releases to interfere with their technical analysis, so the price action follows the indicators in a strict fashion.

 

 

  • Divergent price action and fundamentals – In forex, quite often happens that the price action just doesn´t follow the fundamentals. One example was the 20 cent run up in EUR/USD from 2012 to May 2014, even though the European economy was struggling while the US economy was experiencing a rapid expansion. Another recent example was last week, when the employment data in the US posted a huge 100k jump in jobs created. This was above the expectations for December but EUR/USD declined about 120 pips. As you can see from the chart below, the price was just above a technical support level around 1.08 when the impressive US employment data was published, which opposed the fundamental view. So instead of declining, EUR/USD closed the day 120 pips higher despite the great fundamental economic data from the US. A fundamental trader would get roasted from these two events, so what can a fundamental trader do when the price action doesn´t follow the fundamentals? Well, he should consult with a technical trader or, in our case, follow technical forex signals because there might be things which a fundamental trader cannot see (such as retraces, technical price corrections etc.). So, it would be wise for a fundamental trader to be registered with a technical forex signal provider in order to keep an eye on the technical side of the market. 

 

 

 

 

A support level opposed the fundamental trading strategy and reversed the price
A support level opposed the fundamental trading strategy and reversed the price

 

 

  • Scalping forex signals – There are times when even both technical and fundamental analysis won’t give you a trade, because although the market might be moving, neither of these types of analysis can spot the clear trade. There are other times when the market is moving by only a few pips such as evenings, night time or when the UK or US are on a national holidays. But, here we also have forex scalpers who issue scalping forex signals. They analyze 1-minute, 2-minute and 5-minute forex charts and come up with short-term forex signals that aim for 10 to 20 pips profit. A fundamental trader can follow our scalping forex signals and make a few pips here and there, even when there are no forex trade setups according to their strategy.

As you can see, forex signals are very useful for a fundamental trader. Fundamental traders base their trading strategy on the economic and political news, but experiencing events with significant market impact are scarce. This minimizes the trading opportunities for the fundamental traders, so receiving trade ideas from other professionals using scalping and technical methods is very beneficial. It’s also the reason to subscribe to a great forex signal provider.

Check out other useful forex signals articles here: 

https://www.fxleaders.com/forex-signals/how-to-use-our-forex-signals

 

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