Forex Trading Technical Analysis Fallacy It Doesn't Predict The Future


Forex Trading Technical Analysis Fallacy it Doesn't Predict the Future

The market has moved up to a threshold atForex Millenniumwhich your technical analysis suggests a turn is imminent. The trader takes a sell as the next direction is down. Along comes the government and raises interest rates a bit unexpected and the market continues to rise. The indicators of you were reading them suggested that it might turn, but it also indicated that the forex traders had left the floor, no one was in the market on that pair, it was becoming relatively illiquid. Don't be the brave one and go in, wait until the market sets the new direction.

There are some who believe that the currency pairs are pushed around by banks working as a collective. I know the banks have to move a lot of funds. They also have to at times find a a large amount of currency to get a deal for a large corporation moving. Ever purchased some heavy equipment to start a mine, probably not but you get the idea. Those guys need a huge amount of a currency to fund the purchase of equipment. Not enough banks from around the world could collectively agree on exactly the currency movement that was to be produced. Therefore some banks will have to loose out if they are not part of the collective and what does one have to do to get in. I think that it is a myth that banks can unduly influence the market

A trader analyzes the market, the market is rising on this pair, it looks like a buy position. The thing that the trader hasn't noticed is the dwindling volume in the market the trades are leaving the market on this one. Sorry it looks like you are approaching a peak in the market. The market may get news that continues its climb. It is also reaching a point where it might take a tumble. The analysis of indicators correctly will advise you to stay out on this one until better conditions prevail and remember you can be buying or selling to achieve your desired returns.

With this scenario, if the forex trading analysis comes out to show the MACD correctly indicating a liquid market and the moving averages moving correctly to suggest entry to the market. STOP, take a breath and ask yourself this " Is there a fundamental force that is telling you that the masses might just have it wrong on this occasion" if so go with the gut instinct and stay put until a clearer indicator identifies the true nature, you might miss a bit, but you might save a lot.


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