Example 1

Let’s say you had been looking for a alternate possibility in the beneath 4-hour chart of AUD/USD with the Fibonacci device and the RSI indicator applied to it.

How to Combine Different Types of Forex Analysis – 4-hour chart of AUD/USD with the Fibonacci tool and the RSI indicator utilized to it

The Fibonacci device is often used in technical analysis to identify retracement degrees on the market. As viewed on the above chart, the currency pair lost its value, from 0.8135 on 26th January 2018 to 0.7761 on ninth February 2018, earlier than beginning to retrace upwards.

Initially, AUD/USD used to be trading downwards. Therefore, the expectation is that if charge retraces from the swing low position, it can also locate resistance at any of the marked Fibonacci levels, providing an chance to enter a promote order. So, you ought to use the Fibonacci retracement device to discover the possible areas to area promote orders.

After completing the technical analysis, you then go to integral analysis to give a boost to your change decision.

You appear at the monetary calendar and note that the Reserve Bank of Australia (RBA) Governor will be making a declaration on sixteenth February 2018. Such financial reports from Central Banks are typically watched because they have an effect on the value of the related currencies and lead to heightened volatility in the market.

While declaring the future of RBA’s financial policy decision, the Governor embraced a dovish stance, ensuing in a big fall of the AUD currency.

Therefore, seeing that the statement of the RBA governor was once dovish about the country’s pastime rates, it gives you an added cause to place a sell order on AUD/USD.

To add weight to your exchange decision further, you figure out to appear at the RSI indicator. This indicator measures the market sentiment the use of a scale of 0 to 100.

If the RSI line is within the zero to 30 region, it shows that the currency pair is oversold. And, if the line is inside the 70 to 100 area, it suggests overbought market conditions.

In this case, the RSI indicator indicates that AUD/USD is intently drawing near the 70 mark, suggesting that a reversal is imminent—and you should look closer to setting a sell order.

Here is a precis of your analysis:

Technical analysis: AUD/USD has discovered resistance at the 61.8% Fibonacci retracement level.
Fundamental analysis: RBA’s governor made a dovish remark.
Sentiment analysis: AUD/USD is approaching the overbought territory.
Consequently, after combining the three kinds of forex evaluation and noticing their alignment with your change idea, you then determine to region a sell order on AUD/USD on sixteenth February 2018.

According to your analysis, the currency pair fell in the subsequent couple of days.

Example 2

Here is a 4-hour chart of GBP/USD.

How to Combine Different Types of Forex Analysis – four hour chart of GBP/USD

As viewed on the chart, technical evaluation on the foreign money pair indicates that it is ranging. Two parallel trendlines had been drawn, which confirmed that GBP/USD was once contained in a sideways trend.

Let’s say you wanted to alternate this currency pair via looking for an opportunity for the charge to break out of the horizontal channel.

If the fee may want to pierce the upper line of the channel (resistance level), it may want to offer a chance to enter a buy order. On the different hand, if the fee could ruin out of the aid level, it may want to provide an probability to place a sell order.

After finishing the technical analysis, you then pass to quintessential evaluation to siphon your trade thought further.

You look at the monetary calendar and word that the U.K. Manufacturing Production file is scheduled to be launched on ninth June 2017. The high-impact information is one of the main indications of U.K.’s financial fitness due to the fact it measures the cost of items produced through producers in the country.

When the document was once released, it gave a parent of 0.2%, which was once lower than the forecasted parent of 0.8%. Since the file used to be worse-than-expected, it led to the British pound falling.

To toughen your exchange notion further, you figure out to verify the prevailing market sentiment at that time. Looking at the RSI indicator, you observed that the GBP/USD was coming near the 70 mark, indicating the diminishing bullish pressure.

Here is a precis of your analysis:

• Technical analysis: GBP/USD’s price motion used to be confined to a horizontal range.
• Fundamental analysis: A worse-than-expected record from the U.K. made the pound to fall, resulting in GBP/USD breaking out the range.
• Sentiment analysis: GBP/USD was once nearly overbought, suggesting an coming near near reversal. Consequently, the currency pair slipped past the assist degree and broke out of the horizontal pattern, which supplied you with an probability to enter a promote order.

Conclusion

Using essential analysis, technical analysis, and sentiment evaluation collectively is pivotal for achieving forex trading success. Since every type of evaluation has its personal perks and pitfalls, concentrating on only one method is a recipe for disaster.

If you mix unique techniques from the three kinds of analysis, you will experience the first-rate of them all. With the mixed approach, you’ll add weight to trade choices and can come to be a extra profitable trader.

So, quit embracing a solitary method of using only one type of analysis. Use extraordinary sorts of analysis collectively and the fine results will be reflected by way of the size of your trading account.