You may often read analysts’ comments about today’s market price movements and predictions for trading tomorrow, next week, or even next month. What you need to know is that the analysts provide comments and predictions based on daily trading chart analysis.
Performing daily forex analysis routinely is the work of an analyst. Additionally, it is usually done before the change of trading sessions.
Not only useful for analysts, you also need to apply regular forex daily analysis because it becomes the core of a trading plan. Traders will know market dynamics that are always changing through the results of analyzes that are routinely made. If the trader with discipline accustoms himself to making daily analysis. Then, the trading method certainly will change, so that the results of trading in the long run will be consistent and better.
Let’s look at some ways to make a trading daily analysis:
Determine Support and Resistance
You need to determine support and resistance levels in advance. Since the price will react around that level. You don’t need determine the key levels of resistance or support from every level that appears. It only takes the levels where there is a significant reversal in the direction of price movements. Besides, you need to observe the formation of bars or price action at that level.
Determining Market Conditions
After determining support and resistance levels, the next step is to look at current market conditions. Whether it is trending, sideways (ranging), choppy, or maybe the market is slow and barely moving. This is important to determine whether we will open a new position, modify an open position, or close a position.
Viewing Trading Signals
It depends on the trading method and strategy that you use. You can see the signal to enter the market with the highest probability.
According to Investopedia, trading signals can use a variety of inputs from several disciplines. Typically, technical analysis is a major component, but fundamental analysis, quantitative analysis, and economics can also be inputs.
Generally, the effect of fundamental data releases and news will be easier to analyze if you already know market sentiment based on the nature of the current price movement. However, even a fundamentalist usually sticks to key levels of support or resistance to determine the right entry point. Moreover, you should determine and review the support and resistance every day if there may be changes. By knowing market conditions and key levels every day, you will have a reference and know what to do.
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