As with most financial markets, successful online -trade currency, you must first correctly identify the direction of the courses on the basis of fundamental and / or technical analysis, and then manage the position created following the sound principles of money management.
If you want to create in the market short position in a particular currency pair, forex traders can sell the asset at any time, without worrying about the rules of the short sale, unlike stock traders.
To help currency traders understand when to sell a currency pair without coating, this article examines five bearish signals, which can determine that the currency pair will fall rather than rise.
Tip 1. Look bearish fundamental indicators and events
If the country of the base currency has consistently demonstrated poor economic fundamentals, such as a slowdown, rising unemployment and falling benchmark interest rates against the same index of the country issuing the quote currency, the currency pair will fall rather than rise in the medium or long term.
Additional bearish fundamentals: major disaster, war, financial crisis in the country, a scandalous incident or political uncertainty. Ads for these important events can be an indicator of a sharp short-term depreciation of the relevant currencies against the stronger currency are not affected by such an incident.
Tip 2. Look for bearish figures in the chart
Technical analysts have identified a number of classical figures whose appearance on the chart of the exchange rate for a certain period indicates that the rate of the currency pair will fall rather than rise.
Here are some figures on the chart bearish, which are considered a reliable indicator of the fact that for a certain currency pair is guaranteed short position. Finding one of these figures, you can safely open a short position:
• Bear continuation pattern on the charts. These include flags and pennants, the downlink and the general downward trend (trend).
• The recent breakout from the top down or the bottom of the rising trend of horizontal trading range.
• Bearish reversal patterns in the graphs. These include rising wedge, double or triple tops, head and shoulders, as well as an inverted saucer.
• Bear absorbing pieces on the candlestick chart currency pair.
Tip 3. Look for a bearish divergence in the indicators moment
One of the most reliable bearish technical indicators that can serve as a basis for short selling a particular currency pair is bearish deviation indicator in the moment at the top. By the time the indicators are the stochastic oscillator, convergence / divergence moving average (MACD) and Relative Strength Index (RSI).
As an example of this bearish signal can result in a situation where the maximum rate is formed larger, but less than the maximum RSI, when the RSI is overbought area above the significant level of 70.
Tip 4. Look for a bearish location point on the graph
Checking the validity of the short sale, check proximal support and resistance levels on both sides of the current exchange rate on the chart. If the resistance is strong and is close, and the support is relatively weak and removed, the market is likely to fall.
Tip 5. Look for a strong interest in sales and downward time
A short position in the currency pair is justified if the number of sellers in the market is much higher than the number of buyers.
Also look bearish situation where interest in selling constantly prevails over the interest in the purchase, which causes a downward trend without significant upward correction.
Seeing this downward trend, make sure that the key indicators of the time, such as RSI, continue to support the movement of the rate down to the steady decline lows.
If you want to create in the market short position in a particular currency pair, forex traders can sell the asset at any time, without worrying about the rules of the short sale, unlike stock traders.
To help currency traders understand when to sell a currency pair without coating, this article examines five bearish signals, which can determine that the currency pair will fall rather than rise.
Tip 1. Look bearish fundamental indicators and events
If the country of the base currency has consistently demonstrated poor economic fundamentals, such as a slowdown, rising unemployment and falling benchmark interest rates against the same index of the country issuing the quote currency, the currency pair will fall rather than rise in the medium or long term.
Additional bearish fundamentals: major disaster, war, financial crisis in the country, a scandalous incident or political uncertainty. Ads for these important events can be an indicator of a sharp short-term depreciation of the relevant currencies against the stronger currency are not affected by such an incident.
Tip 2. Look for bearish figures in the chart
Technical analysts have identified a number of classical figures whose appearance on the chart of the exchange rate for a certain period indicates that the rate of the currency pair will fall rather than rise.
Here are some figures on the chart bearish, which are considered a reliable indicator of the fact that for a certain currency pair is guaranteed short position. Finding one of these figures, you can safely open a short position:
• Bear continuation pattern on the charts. These include flags and pennants, the downlink and the general downward trend (trend).
• The recent breakout from the top down or the bottom of the rising trend of horizontal trading range.
• Bearish reversal patterns in the graphs. These include rising wedge, double or triple tops, head and shoulders, as well as an inverted saucer.
• Bear absorbing pieces on the candlestick chart currency pair.
Tip 3. Look for a bearish divergence in the indicators moment
One of the most reliable bearish technical indicators that can serve as a basis for short selling a particular currency pair is bearish deviation indicator in the moment at the top. By the time the indicators are the stochastic oscillator, convergence / divergence moving average (MACD) and Relative Strength Index (RSI).
As an example of this bearish signal can result in a situation where the maximum rate is formed larger, but less than the maximum RSI, when the RSI is overbought area above the significant level of 70.
Tip 4. Look for a bearish location point on the graph
Checking the validity of the short sale, check proximal support and resistance levels on both sides of the current exchange rate on the chart. If the resistance is strong and is close, and the support is relatively weak and removed, the market is likely to fall.
Tip 5. Look for a strong interest in sales and downward time
A short position in the currency pair is justified if the number of sellers in the market is much higher than the number of buyers.
Also look bearish situation where interest in selling constantly prevails over the interest in the purchase, which causes a downward trend without significant upward correction.
Seeing this downward trend, make sure that the key indicators of the time, such as RSI, continue to support the movement of the rate down to the steady decline lows.
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