Generally, Forex price movements are the result of changing economic conditions within a country. These changes are analyzed by traders and the perceived value will entice a trader to buy or sell, based on current prices... ie: is it good value?
Other traders place little emphasis on the economic indicators and choose to search for patterns in price charts or the indicators on those charts. When prices reach a certain level, these traders buy or sell based upon signals they get from their "systems". As part of your Forex training, you should understand the role of both.
The inner circle of major market players are believed to put about a 50% weight on the economic factors and 25% or so on the price chart factors. Mathematicians, usually from outside the market, claim it's a coin toss, with prices just as likely to go up as down.
I like to keep informed about the
Fundamental indicators.
If the big guys are putting more faith in them, I feel I should too. Prices quite obviously react, often violently, at data releases and often trends will change direction at these points.
Although my trading platform has the ability to display enough graphs and oscillators to completely obscure my screen, I only use a couple of
Technical indicators
and usually just as warning lights. Many technical traders follow certain support and resistance levels generated by their price charts, and I like to respect the presence of these levels. These levels also often cause trend changes, likely because of the large following of traders that use them.
You need to be aware of and respect both of these causes of Forex price movement and trade them accordingly. Understanding that both play a part will make you a better trader.
