Forex Marketz Daily Forex News – Fully Markets Update
Trading Analysis is usually based on the current and short term before and after the present. As any trader with experience understands, we often want to incorporate historical trends to better understand the position of the currency pair. Let’s look at this daily chart of the USD/JPY currency pair:
In the above chart the pair appears to be trending upwards since around the middle of October. The red line in the center of the chart is the moving average. In this case, the moving average was calculate at taking the average of the last 14 points (days) before. This “MA” line is useful to understand how the previous historicals fare for the current time period. We can even see that the trading for the last month has been above the moving average. This implies that the trend is really a strong bullish one. As the bullish pattern plateaus or changes we will see the daily trades becoming closer to the MA or even below it.
Traders should know that the calculation of the MA can be adjusted in your platform. Normally the default is 14 periods, but we can adjust to even 200 periods. Here is what this looks like for 90 periods (ie: 3 months):
What is significant is that the 90 day trend is still showing upwards. As we plan our trading positions, we should be aware of the strength of the trend — in this case still strong — and plan accordingly.
