The concepts of support and resistance are not just forex markets, but a concept of technical analysis that is used throughout financial markets. In general, support can be explained as the level at which prices are expected to decline. The persistence of sales in the financial market at support levels is interpreted as the response of buyers at this level. However, it should not be forgotten that in the case of breakdown of important support levels, that is, if downward support points are crossed, sales will accelerate and the support point will become a point of resistance. Breaking a support point does not mean that the support level is below the support level. We can say when a level of support is broken, clearly when it closes below this level. When we look at the historical charts in Forex markets, the first multiplier is the support level where the sales are stopped and the prices can not fall further below this level. At these price levels, the Euro dollar pair has found support, as can be seen from the levels indicated by blue in the chart below. Below you can find examples of euro usd support resistance level.
Bollinger bands are a volatility band that is often used in technical analysis, developed by John Bollinger in the 1980s. Volatility is a variable dependent on standard deviation, and volatility increases or decreases affect standard deviation. Bollinger bands are narrowing when volatility rises and bollinger bands are decreasing when volatility is decreasing. In 2011, bollinger bands will be patented on behalf of John Bollinger. Prices for Bollinger bands are relatively high or low. According to Bollinger, tapes contain 88-89% of price movements. It is stated that the price movements of these beds out of band width bands are unusual. Technically speaking, the prices are relatively high if they are close to the high band, and the prices are relatively low when they are close to the low band. Nevertheless, the relatively high price movements should not be construed as buying or selling signals.
HOW TO CALCULATE BOLLING BITS?
Medium Band: 20-day simple moving average
Upper Bant: 20-day simple moving average + (standard deviation of 20 days price x 2)
Lower Bant: 20-day simple moving average – (standard deviation of 20-day price x 2)
HOW TO USE BOLLİNG TANKS?
An example of the bollinger band appears in the above graphic. In this example, the middle line shows the 20-day moving average. There are two lines above and below this line. Upper line; Above the standard deviation of the moving average in the middle, the bottom field line and the moving average in the middle denote the K standard deviation. In general, the standard deviation is assumed to be 2 in the bollinger bands and 20 in the period.
The most important reason for using Bollinger bands is that the financial product can be held at high and low levels and it can be predicted which band the related product will fluctuate between. In general, over-bought levels can be interpreted when a financial product touches the upper level of the bollinger bands, and over-priced levels when the lower-band holds. But alone does not give enough results. It can give meaningful results when used with Bollinger tapes and others.
Stage 1: Staging is the phase in which very cheap commodities sold by investors who are in trouble and discouraged are being collected by large investors. Yet there is no significant upward trend and there is still little interest in the market in general.
2nd Stage-Buying Wave: It is the phase in which the signs of recovery in the market have begun to be clearly noticed after the addition phase, and small investors are now included in the buying wave.
Stage-Saturation: The market has reached a certain degree of saturation with the increase in volume, and the buyer has decreased considerably in the market. It indicates that the bull market has come to an end, so it can be expected to start a wave of steep declines.
BULK MARKET EXAMPLES
Gold has been in a significant bull market since the early 2000s. Gold prices have risen from $ 800 ounce levels to $ 1900 ounce levels. This is the case for a strong golden bull market.
While there is no general consensus about how long the bear market will last, it is expected that prices will continue to fall for a long time. Demand for products on a market under the bear market is declining. Because demand is decreasing, nobody wants to buy those products and prices continue to fall.
The bull market, on the contrary of the bear market, shows that the related market will be on the rising trend for a long time and that the demand for the products in that market is increasing.
If gold prices were to be taken as an example, the bull market was experiencing a rising trend from the beginning of 2000s to the end of 2011 for a long time. However, in the middle of 2013, 2011 peak price level of 1900 dollars ounce of the level of 1500 ounces fell below. There was a decrease of about 30% from the previous peak level and gold prices were officially under the influence of the bull market.
We can explain it in two ways.
In addition to trading a profit or a return, foreign exchange trading can be used to hedge a stock portfolio. For example, if you set up a portfolio of shares in a country with a potential to raise the value of a share, but a risk of insolvency in currency, such as in the recent US, then a trader may own the share. Create a portfolio and shorten the Swiss franc or euro To sell futures. In this way, the portfolio value will increase and the negative impact of the falling dollar will be significant. This is true for investors outside the United States who take their earnings back to their own currency.
A second approach to transaction currencies is to understand baselines and long-term benefits when a currency advances in a particular direction and provides a positive interest rate differential that provides a value in the currency value of the return of the investment. This type of trade is known as “transport trade”.
For example, a trader can take the Australian Dollar against the Japanese Yen. When the original of this article is published, the Japanese interest rate is 0.05%, the most recently reported Australian interest rate is 4.75%, so a trader can earn 4% in this trade.
Nevertheless, such a positive interest should be seen in the real exchange rate context of the AUD / JPY before the decision of interest is given. If the Australian dollar is strengthening against the yen, it would be appropriate to hold the AUD / JPY to gain both the appreciation of the currency and the yield of interest.
Oil is among the most heavily traded commodities in the Forex markets. There are two types of Oil used in the world.
Crude oil, which is very important in the world economy and accepted as black gold; Industrial, automotive, energy, chemical, cosmetics. The world is being used as a leading indicator of oil prices and is being removed from the state of Texas. Light Sweet Crude Oil (WTI) oil is called “Texas light sweet” because of its low light (light) and low sulfur (sweet) content. Crude oil prices show great sensitivity to political and economic developments, but also change as the geopolitical risks in the Middle East increase. Many factors, such as oil reserve levels, changes in global climate, economic developments, supply and demand balance, have an impact on crude oil prices. In the forex market of crude oil, the volume of transactions is quite high, and in the market both profit and loss can be achieved both in value increments and in value losses.
After crude oil is the second highest quality oil in the world. Its name is taken from the initials of five separate tectonic strata in the North Sea (Broom, Rannoch, Etieve, Ness, Tarbat) between England and Norway. It shows great sensitivity to political and economic developments, but is affected more quickly than the changes that may occur. The geopolitical risks and economic vitality on the Eurozone are influential in the upward and downward movement of prices, as developments in the Middle East are influential on Brent Oil prices.
Transactions on oil at financial markets may be futures (traded within a certain period) or as demand (traders continuing until the investor finishes trading positions). Therefore, there is no obligation to close positions at the end of the maturity. The positive or negative overnight cost (Swap) is reflected according to the trading direction of the investor.
Investment decisions can be taken more precisely when all the circumstances are considered and when the commodity has trackable information.
A parity is a pair of currencies in which a country’s currency is valued against the currency of the other country. According to their prevalence in global markets, major and minor (exotic) parities are examined in two groups. The parallels traded most in global markets are called major. Another reason for the major denomination of these currencies is that country economies are robust and dynamic.
There are 7 major currencies that are traded on financial markets. These are Euro, US Dollar, Japanese Yen, British Sterling, Swiss Franc, Canadian Dollar, Australian Dollar. Minor currencies are currencies with lower transaction volumes, preferred by local investors.
The most preferred minor currencies are New Zealand Dollar, South African Randi, Singapore Dollar. Parity pairs consisting of one major currency and one minor currency are also called minor parity.
On the Forex market, every transaction on the parity occurs when a foreign currency is sold and other foreign currency is bought. According to this price, it is necessary to understand how much the counter currency should be paid to get one from the first currency. If the EURUSD is priced at 1.1090, EUR1.1090 will have to be paid to get 1 EURO. In the Forex market, investors aim to earn from price fluctuations of currency pairs by buying or selling other currencies in exchange for a foreign currency. The expectation of investors who want to buy the euro and make a profit increases the value of parity, but this situation is shaped by the multiplicity of supply and demand.
How is the parity calculated? We will clarify this question with the help of a sample;
EURUSD is calculated as: 3,2440 / 2,9220 = 1,1101.
There are many factors that affect the price of the parity. These are economic data, decisions of the Central Bank, political developments and geopolitical risks, which have a significant effect on the price of the currency. The increase in interest rates ensures that the growth figures announced on the anticipation or the value of the industrial currency are appreciated; Low employment, rising foreign trade deficits in emerging countries, or rising inflation lead to the devaluation of the money. The uncertainties in the political structure of the country and the loss of political confidence will cause the currency to lose value.
Gold, the basis of the money system between 1870 and 1930, played a pivotal role in the markets (1944-1973), equaling one ounce and 35 euros with the Bretton Woods System. By 1973, the gold fixed exchange instrument with the dollar was terminated, causing it to be used as part of individual savings instruments and central banks reserves. With the development of financial markets, interest in alternative investment instruments increased and demand for gold declined until 2000’s. The increase in the global risk perception during 2000s has made gold a safe port in the market.
Internationally, 1 ounce is considered to be 31.10 grams gold. In leapfrogged markets, 1 lot of gold is calculated over 100 ounces. That is, when 1 lot of gold purchase or sale is opened on the platform, it corresponds to approximately 110 grams of 3 kilograms in physics. When the gold ounce price is accepted as 1270 USD, 1 lot gold on the platform requires a collateral of 1270 USD when calculated over 1: 100 leverage.
In the world, this precious metal, which is the most important investment and payment instrument of both individuals and the general economy, has become able to invest more in recent periods. Some difficulties have been observed in physical purchases in the market, where mobility has increased in recent years.
Especially, it is known that the rising price of gold is felt more in physical purchases, but it is limited in selling gold at hand. However, the forex market offers such a system that it is possible to deal with these kinds of negatives at the same time as it can be done 5 days and 24 hours at the same time.
The difference between swapped and non-swapped accounts is briefly mentioned. If you have decided to invest in the investment world and do not want to use SWAP, you can research swapless account presentation investment platforms.