EURUSD - Fundamental Analysis - Must read Article

FX:EURUSD   Euro / U.S. Dollar
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Ok here i have seen many Forex traders just posting charts with so called Patterns and loaded Indicators. In reality these all useless until and unless Traders understand Fundamentals behind price Movement. Whenever we ask someone why price moves up or down or why price always try to create Higher High and Lower low before reversal then what answer we get is because there are more buyers or more sellers ! Seriously Guys? This is completely wrong understanding and i must say you need to clear your understanding about market before moving any further.


Let me explain you one very basic but simple example here, let say you own a shop of ready-made garments and you buying a shirts to sell in your shop. Now let's say you bough a shirt by paying $5 so this is your highest price which you bought a shirt at or if we see same in Forex then this is the previous Highest cost at which Currency Bought at. Now Second step what you going to do with this shirt? Obviously you going to add a profit to it. Let say you added $3 profit to your Buying Cost(Previous High) and now your selling cost is $8. So for new Buyer If they want to Buy that shirt then new price will be your previous High = $5 + Your Profit = $3 so total =$8 new higher high. So when ever price goes to break a previous higher high this means a buyers will buy or break that High by paying previous buying cost + profit and creates new Higher High. Same applies to Sellers or Bearish trend . So guys just clear your fundamentals before jumping in to market as if fundamentals not clear this could be a dangerous business and no Indicators or patterns can come to save you from loss.
You have just confirmed that you need more buyers than sellers to make higher highs. The price is going higher because there are more buyers of T shirts for 8$ than sellers who wants to sell them for 8$. If demand (buyers) is higher than supply (sellers) the price is going up.
+2 Reply
Nice one buddy
Thanks, i am trying to create series of articles which clears some misunderstanding from traders about Forex trading and may could help them become better trader :)
Nice article!
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