On the way, trading gives us some valuable experience. In addition to sharpening our intuition in reading market conditions, we will also find some unique phenomenon of the various charts that we meet every day. And after investigating the phenomenon further, it turns out the phenomenon can be used as a foundation for a trading method, be it in technical analysis and fundamental analysis.
Examples of such phenomena are:
Round Number
The Round Number is literally interpreted as a round or even number. In everyday life, we often round up the numbers we meet. For example the price of an item; Such as the price of goods we buy is $28.750 then we will tend to say the price of goods is $30.000 when asked about the price of the goods.
Humans love order and simplicity in counting; Because if the number we count is an integer (ending with the number 0), then the calculation process will be faster and easier. It turns out that this habit (consciously or unconsciously) belongs to the majority of people on earth; Including forex traders (both small traders and institutional traders), Banks, and even important institutions of the IMF class or world central banks.
On the chart above, you can see the regularity of the price movement when it reaches / touches the round numbers. The more rounded the number (1,0500 more rounded than 1.0550, and so on), the greater the effect on price movements. And this round number then becomes the support or resistance line; Depending on the trend of the pair. In the first image, for AUD / USD pair there is a strong support / resistance line 1.0000. Then in early 2006 when price movement on EURUSD pair touched the number 1.2700.
This integer is a psychological wall that exists in the minds of many traders and banks that are reflected on the forex chart. And based on this phenomenon, not a few traders who then add this phenomenon in their analysis, or even create a new trading method.
However, there are other factors that influence price movements, not just based on human likes on whole numbers; So that not every round number of price movements may slow down. Examples of such factors such as trading volume, fundamental factors, market saturation, etc.
Overflow Price Fluctuations
Have you noticed that when certain hours, the market movements become very volatile, causing considerable shadow; Or even leave a long body?
Actually there are some events that affect it, namely:
When bank hours start
When the capital market and the forex market are opened in a certain country; Which correlates with bank hours, in the first few minutes we often encounter price fluctuations that are quite sharp due to the entry of new orders from traders; Especially financial institutions.
In the picture above is a table compiled based on the working hours of each central bank in the world in Indonesia time. And there is an average daily volume that is made in the form of a graph during the central bank working hours.
Pay attention at 14.00 pm, for the euro (EUR) and pound (GBP) currency will experience a significant movement. The same is true for other currencies when the central bank clock for the currency starts.
When the interest rate decision / interest rate is issued
Central banks of a country, such as the RBA, FED, etc., often release interest rate announcements on the same day each month. This announcement directly affects the value of the country's currency.
When the release of an economic data
Just like the announcements released by banks, several government agencies routinely release various economic reports in which economic performance is listed in certain fields for the country; Such as trade balance conditions, manufacturing production, total consumer spending, etc. Like the previous points, this directly affects the movement of currency values on the forex chart and causes significant price fluctuations. An example of the impact of the largest economic data is when there is an announcement from the People's Republic of China (PRC / China) that causes price fluctuations in almost all pairs in forex.
Examples of such phenomena are:
Round Number
The Round Number is literally interpreted as a round or even number. In everyday life, we often round up the numbers we meet. For example the price of an item; Such as the price of goods we buy is $28.750 then we will tend to say the price of goods is $30.000 when asked about the price of the goods.
Humans love order and simplicity in counting; Because if the number we count is an integer (ending with the number 0), then the calculation process will be faster and easier. It turns out that this habit (consciously or unconsciously) belongs to the majority of people on earth; Including forex traders (both small traders and institutional traders), Banks, and even important institutions of the IMF class or world central banks.
On the chart above, you can see the regularity of the price movement when it reaches / touches the round numbers. The more rounded the number (1,0500 more rounded than 1.0550, and so on), the greater the effect on price movements. And this round number then becomes the support or resistance line; Depending on the trend of the pair. In the first image, for AUD / USD pair there is a strong support / resistance line 1.0000. Then in early 2006 when price movement on EURUSD pair touched the number 1.2700.
This integer is a psychological wall that exists in the minds of many traders and banks that are reflected on the forex chart. And based on this phenomenon, not a few traders who then add this phenomenon in their analysis, or even create a new trading method.
However, there are other factors that influence price movements, not just based on human likes on whole numbers; So that not every round number of price movements may slow down. Examples of such factors such as trading volume, fundamental factors, market saturation, etc.
Overflow Price Fluctuations
Have you noticed that when certain hours, the market movements become very volatile, causing considerable shadow; Or even leave a long body?
Actually there are some events that affect it, namely:
When bank hours start
When the capital market and the forex market are opened in a certain country; Which correlates with bank hours, in the first few minutes we often encounter price fluctuations that are quite sharp due to the entry of new orders from traders; Especially financial institutions.
In the picture above is a table compiled based on the working hours of each central bank in the world in Indonesia time. And there is an average daily volume that is made in the form of a graph during the central bank working hours.
Pay attention at 14.00 pm, for the euro (EUR) and pound (GBP) currency will experience a significant movement. The same is true for other currencies when the central bank clock for the currency starts.
When the interest rate decision / interest rate is issued
Central banks of a country, such as the RBA, FED, etc., often release interest rate announcements on the same day each month. This announcement directly affects the value of the country's currency.
When the release of an economic data
Just like the announcements released by banks, several government agencies routinely release various economic reports in which economic performance is listed in certain fields for the country; Such as trade balance conditions, manufacturing production, total consumer spending, etc. Like the previous points, this directly affects the movement of currency values on the forex chart and causes significant price fluctuations. An example of the impact of the largest economic data is when there is an announcement from the People's Republic of China (PRC / China) that causes price fluctuations in almost all pairs in forex.
Comments
Post a Comment