Three Factors to Move a Forex Pair

Three Factors To Move A Forex Pair

One thing which might be said of the Forex market is that it does not flow so much, within and out of support and resistance. This is a way of saying that it tends to move within containers, creating what can be a structured set of patterns formed and deformed within them.

So a given move may lead into further moves within its container, rather than without. Thus clear patterns, yet complex outcomes. To look at Forex patterns is may be helpful to see what makes these containers and what patterns fit them. These causes of containers can be classified as a) big figures, b) market events and c) support and resistance over multiple time frames.

To try and understand a), one needs to look into big figures. To try and understand b), one needs to look into the way a pair can behave around news events. To try and understand c), one needs to perform multiple time frame analysis.

An interesting question is, do these three factors interact. That is, does it make sense to perform a multiple time frame analysis, for example, before a major news event. The answer to this is that is depends, but it is the case that news reactions, even very strong ones, can clearly respect support and resistance, at some stage. This is though an example of Forex unpredictability, the sense of well this outcome may happen, but when it happens it an open question.

Thus patterns make clear sense after the event. However it can be helpful to 'nativise' pattern formation in the context of the way the market contains and releases value, if only to help understand what is going on and to be beware of expectations that an outcome will happen.

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