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Remember, we trade news as it has the potential to increase volatility in the short term, so we prefer to only trade news that has the most potential in the forex market.
Beo Forex Economic Calendar highlights the most important events and economic data from countries where currencies are most traded.
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In any given week, there can be more than a hundred activities planned! Reviewing so many events can be a pain in the ass.
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If you look at the economic calendar, you will see that the most important events revolve around economic growth such as interest rate adjustments, inflation and retail sales, manufacturing and consumer sentiment.
For example, interest rate decisions may be the main focus at one point, while at another time it may seem like nobody cares.
While most economic news from other countries affects the markets, the most moving and closely watched news comes from the United States.
Whether in military affairs, geopolitics, industry, energy, science, culture or technology, the United States remains the most powerful country in the world.
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While failures, imbalances and insecurities have weakened its position, the dominance and influence of the US dollar will not be coming back anytime soon.
This means that the US dollar is involved in about 90% of all currency transactions, making it very important to follow US news and statistics.
Besides inflation reports and central bank speeches, you should also pay attention to geopolitical news such as inflation reports and central bank speeches.
Our resident economics expert, Wilson Walter, when you’re in a good mood, usually writes an article about upcoming news, trading methods for you to play with!
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Our next step is to evaluate which currency pairs are worth trading, now that we know which news events are causing the biggest movement.
It is important to trade with deep liquid currencies as news can lead to higher volatility (and therefore more trading opportunities) in the forex market.
Discover the benefits of sustainable financial systems with $6.6 trillion in daily transactions and develop a plan to build a sustainable economy with long-term value returns.
Risk Warning: Derivatives trading involves high risk to your capital and you should only trade with money you can afford to lose. Derivatives trading may not be suitable for all investors, so please make sure you fully understand the risks involved and seek independent advice when appropriate. There are many ways to trade currencies, choosing common methods will save time, money and effort. By developing common and simple methods, a trader can develop a complete trading plan using patterns that occur regularly and can be easily detected with a little practice. Head and shoulders, candlestick, and Ichimokuforex patterns all provide visual cues for trades. While these methods can be complex, there are simple ones that take advantage of the most traded elements of these related patterns.
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Although there are several chart patterns of varying complexity, there are two common patterns encountered regularly that provide a relatively simple method of trading. These two patterns are head and shoulders and triangle.
The H&S pattern can be an upper pattern following an uptrend or a lower pattern following a downtrend. A top pattern is a high price followed by a reversal, a higher price, a reversal followed by a lower drop. The bottom pattern is a low (“shoulders”), a lower low (“head”) after a reversal, and a higher low (second “shoulder”) after a reversal (see below). The pattern is complete when the trend line (“neckline”) connecting two highs (lower pattern) or two lows (upper pattern) of the pattern is broken.
This pattern is tradable as it provides entry level, stop level and profit target. The image above is the daily chart of EUR/USD and the pattern below H&S. The record is given at 1.24 when the “neckline” of the pattern is broken. A stop can be placed under the right shoulder at 1.2150 (conservative) or placed under the head at 1.1960; Second, it exposes the trader to more risk, but less chance of stopping before the profit target is reached.
The profit target is determined by taking the height of the formation and then adding it to the breakout point. The profit target in this case is 1.2700-1.1900 (approximately) = 0.08 + 1.2400 (this is the breakout point) = 1.31. The profit target is marked with a square to the far right of where the market went after the breakout.
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Triangles are very common, especially in the short run. Triangles form when prices match highs and lows where prices narrow into tighter and tighter price zones. They can be symmetrical, ascending or descending, but for trading purposes the difference is minimal.
The diagram below shows a symmetrical triangle. The model is tradable as it provides an entry, stop and profit target. The entry is made when entering the perimeter of the triangle – in this case, the entry at the top is 1.4032. The stop is low pattern at 1.4025. The profit target is determined by adding the pattern height to the entry price (1.4032). The height of the model is 25 pips, giving a profit target of 1.4057, which is quickly hit and exceeded.
Candlestick charts provide more information than line, OHLC, or area charts. Therefore, candlestick patterns are a useful tool for evaluating price action across all time frames. Although there are many candlestick patterns, there is one that is particularly useful in forex trading.
The absorption pattern is a great trading opportunity because it is easy to spot and price action indicates a strong and sudden change in direction. During a downtrend, the rising true body of the candle completely swallows the true body of the previous down candle (bullish swallow). During an uptrend, the true body of the bearish candle completely absorbs the true body of the previous up candle (bear absorption).
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The pattern is highly tradeable as the price action signals a strong reversal as the previous candle has already completely reversed. A trader can participate in the start of a potential trend by placing a stop. In the chart below, we see a growth rate that indicates that an uptrend has emerged. The entry is the opening of the first bar after the die is created, in this case 1.4400. The stop is placed below the low formation at 1.4157. There is no clear profit target for this model.
Ichimoku is a technical indicator that overlays price data on a chart. While it is not that easy to pick out patterns in a true Ichimoku pattern, we see a common pattern of events when we combine the Ichimoku cloud with price action. Ichimoku clouds are former support and resistance levels that combine to form a dynamic support and resistance zone. Simply put, if the price action is above the cloud, it is bullish and the cloud acts as support. If the price action is below the cloud, it is bearish and the cloud acts as resistance.
A “cloud” breakout is a common continuation pattern, but because cloud support/resistance is much more dynamic than traditional horizontal support/resistance lines, it provides infrequent entries and stops. By using the Ichimoku cloud in a trend setting, a trader can usually capture a large portion of the trend. During an uptrend or downtrend, there are several opportunities for multiple entries (pyramid trades) or trailing stop levels.
During the downtrend that started in September 2010, there were eight potential records where the indicator went to the cloud but failed to break through. Entries can be taken when the price drops below (outside) the cloud, confirming that the downtrend is still valid and the retracement process is complete. The cloud can also be used as a trailing stop, with the outer boundary always acting as a stop.
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In this case, the lower the rate, the lower the cloud – the outer band of the cloud (upper in downtrend, lower in uptrend) is where a trailing stop can be placed. This pattern is best used in trend-based pairs, often involving USD.
There are many trading methods that use price patterns for entry and stop levels. Forex chart patterns featuring triangles as well as heads and shoulders provide entries, stops and profit targets in an easy to see pattern. The absorption candlestick pattern provides insight into a trend reversal and potential participation in that trend with defined entry and stop levels.
Ichimoku cloud jump joins long trends using multiple entries and trailing stops. As a trader progresses, they can begin to combine patterns and methods to create a unique and personalized trading system.
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