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April 11, 2016

Forex Momentum and Price Actions

Sometimes the momentum of a currency pair can make a difference. The momentum in whatever you are looking to trade can influence what you will get out of a great transaction.

What is Momentum?

Momentum is a word that is always being thrown around to suggest that something big is moving around in a particular direction. Specifically, it is as though the value of something can change or improve after a while and will keep on moving in that same direction for a while.

The momentum from a forex perspective refers to how well the value of a pair will change. This includes a look at how much of a change will occur and how consistent and efficient that will be.
The currency pair can be strong enough to where it will carry through and keep on moving up in value when a trend is going along. This will be regardless of whether the value of the currency pair is going up or down.

The MACD is the key to figuring out the momentum. The crossover that goes between the MACD and the moving average will often be a sign of what can be required to implement momentum Forex strategy. It can also be reflective of when the strength of the market is carrying over after a while.

How Price Actions Occur

Price actions Forex strategy refers to the movement of the price of a specific forex pair. Actions can easily occur when there is a higher amount of trading on one pair within a certain period of time.
The changes can be reviewed with care in the price action readout. Changes in the highs and lows can be reviewed in terms of how the market is running.

How to Find a Reversal or Continuation

Reversals and continuations are especially important for this FX strategy to see when reviewing what might go on within a currency pair. You can easily identify a reversal or continuation by using a few special pointers to make it easier to follow:

1.      The sentiment in trading can easily change and go in an opposite direction du ring a trading period. This can especially be a sign of how trading habits might change over time.
2.      Trends in trading might start to slow down. The highs and lows may not be all that extreme or varied. The amount of trading might also decline to where a pair is not being used all that often.
3.      The statistics for the price can be important but the key is to think about how traders are coming in and out of a pair.
4.      The price movements within a certain path can also go on for weeks or months on end.

Such movements can easily shift after a while and should be checked carefully to give yourself an idea of what can happen when getting trades to work for you. If you feel that this strategy is too complex for you, you can try to implement 1 minute FX trading strategy.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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Item Reviewed: Forex Momentum and Price Actions Rating: 5 Reviewed By: EconMatters