A Self-Study Guide To Becoming Successful …
Indicators are a type of technical or fundamental analysis to conduct prior to investing in a currency pair. Using NZD/CZK as an example charts will be assessed in this forex trading course. The charts are put into text here for your better understanding. You may also want to bring up a visual on your trading platform or online website. It can be helpful to read about indicators, as well as see them.
Forex Trading Course: The NZD/CZK Pairing Explained
Sometimes starting with a longer history reveals the truth about a currency pairing. The NZD/CZK might have you thinking about volatility with too much risk to trade. In the short term you would not be wrong. Yet, what if you learned in a five year period the NZD/CZK went from under 11.000 to over 16.000? It sounds like in five years you could have made money, right? This forex trading course is not suggesting you put a trade in for such a long time. Hindsight is one thing, but to trade on the hope that a pattern will continue for five years or longer would be too risky.
Instead, what you want to look for in the five year charts is what indicated the trend would continue up as it did. The New Zealand Dollar gained in strength during this period, but recent drops in the rates suggest the CZK is gaining a little value back. Of course in five years some reversal did occur, but it was not maintained. First consider what might have created this type of pattern. What has another forex trading course taught you? Perhaps you learned about the influence of fundamentals and understand that in the last five years Europe was in turmoil.
Forex Trading Course: Indicators found on NZD/CZK Charts
Fundamental indicators such as economic reports can drive currency prices. The credit crunch that created the global recession and affected a great deal of Europe would naturally mean a loss for the CZK. The Czech Republic is also still emerging compared to New Zealand, which is among the top 20 strongest countries in terms of economics.
A year chart is going to give a better example of the recent happenings. In this type of chart you see more volatility which would make most investors shy away from the NZD/CZK.
In a forex trading course or most courses actually you are taught to avoid volatility. You want instead volume and liquidity. The NZD/CZK is not going to have much of either. It will see a lot of manipulation by day traders, which can affect the indicators you see in the charts. Two things are most evident regarding the last year for this pair. You had two periods of a downtrend for the pair, with a fairly volatile consolidation period. During the long consolidation the pair did move up a little each time. Most recently in June 2013 there was a 52 week high, which caused a consolidation before a reversal of trend for CZK value. Gaining in value means a downtrend for the rates.