(Download this FREE PDF for basics of Binary Options
There are three types of analysis used for forecasting market movements;
1. Fundamental analysis: This is an analysis of social, economic, and political factors affecting money supply and demand.
2. Technical analysis: This is a study of price and volume movement.
3. Sentiment Analysis: Apart from mini and micro analysis of data, this is the analysis of the mindsets and sentiments of traders and investors.
Fundamental Analysis and Technical Analysis (FA and TA) go hand-in-hand in guiding the Block Option trader through the way the market (prices) may go under the ever changing market conditions.
Ensure to Read other posts on this page that are related to block chain
Binary Options Broker Reviews Click here)
🔥Fundamental Analysis on Block Option Trading
It is the analysis of economic and political information with the hope of predicting future currency price movements.
Fundamental analysis helps in forecasting future prices of various foreign currencies. Forecasting of prices is based on a number of key economic factors and indicators that determine the strength of a country’s economy. The factors may also include various geopolitical aspects that may impact the price movement of a currency pair.
This analysis is not used to get the specific numbers for the exchange rates of various currencies. Instead, it helps in determining the trend of the forex spot market over a certain period.
If the fundamental analysis hints at a positive outlook for a particular currency pair, it indicates that the price of that pair would experience an upward trajectory movement in the near future. A negative outlook indicates a declining price movement of currency pair in coming future. A neutral instance on currency pair indicates a flat (not much +ve or — ve side movement) movement in the near future.
==> Key factors influencing fundamental analysis
Let us now learn about the key factors that influence fundamental analysis. The factors are described below in brief −
=> Interest Rates
The interest rates set by the central bank is one of the most important factors in deciding the price movement of currency pairs. A high interest rate increases the attractiveness of a country’s currency and also attracts forex investors towards buying.
A high GDP growth rate signifies an increase in the total wealth of the country. This points towards the strengthening of the country’s currency and its value rises relative to other foreign currencies.
A high industrial growth in any country signifies a robust country economy. A country with robust economy encourages forex traders to invest in country forex currency.
=>Consumer Price Index (CPI)
The Consumer Price Index (CPI) is directly proportional to the prices of goods and services in the country. If the CPI index is too high (above the central bank benchmark of CPI), there is a high probability that central bank is most likely to lower interest rates to bring down the rate of inflation and stabilize the growth rate for the country’s economy.
A country’s retail sales data gives an accurate picture of how people are spending (people income level) and the health of its economy at the lowest level. A strong retail sales figure shows that the domestic economy of a country is in strong shape; it points towards positive growth rates in the future.
Apart from these above points, the traders and investors also look into other factors of fundamental analysis like employment statistics, national debt levels, supply and demand balance, monetary policy, political situation, trade deficit, commodity prices, housing prices and capital market growth.
(Feed generated with FetchRSS)