A break above the 1.1800 price level...
Bias: Consolidation/Likely Bullish...
A massive bearish recovery...
How many of these complicated terms have you seen, and where have you been seeing them?
...On our posts right? Yes, you garrit!
Every week, we forecast and dish likely price directions of liquid Forex pairs to trade for cool profits of up to 100 pips.
To interpret and convert the analysis to profits, there are some Forex terms that you need to understand, especially if you are just setting out on your Forex trading journey. These terms may appear a little "over-the-top" if you're new to the world of Forex trading.
You're like "why is this even necessary?"
Yes, it is very necessary! To trade Forex and earn profitably from it, you have to understand and "speak" the Forex language the same way you are inclined to learning basic Francais before touring the Anglophone countries, or Spanish before visiting Spain or the Cid Campeador in Argentina.
Of course, you don't have to memorize a stack of thesauri to roll with the Spaniards or the French, but basic phrases to say "Hi" or in the least, buy some food!
Are you primed to take in some basic Forex terminologies and their respective meanings as applied to Forex trading? Grab your popcorn and let's roll, it's gonna be fun!
One word for Go-Long? Buy.
Now, to the boring textbook definition: "Going Long can be defined as the process of purchasing an instrument with the belief that it will rise in value".
So when you see "Go-Long on EUR/USD", you know what that means: Buy EUR/USD. Easy-peasy!
One word for Go-Short? Sell.
Just the opposite of "Go-Long", and it is defined as the process of purchasing an instrument with the belief that it will fall in value.
Do you know what "Go-Short on EUR/JPY" means now? Great!
Bullish Market and Bullish Reversal
Bullish Market and Going-Long are somewhat related. A Bullish Market occurs when there is an uptrend, i.e. when the price of an instrument keeps "going long" (buying).
Bearish Market and Bearish Reversal
By now, you should know that Bearish Market and Going-Short have something in common. A Bearish Market occurs when there is a downtrend, i.e. when the price of an instrument keeps "going short" (selling).
If you cannot tell from the chart if a commodity is buying or selling, then it's most likely consolidating.
Consolidation is defined as the lack of a defined trend in a particular trading range. If the price (as indicated on an instrument's chart) is not trending up or down, then it is “consolidating”.
A breakout is an abrupt sharp movement in the price of an asset from established support and resistance areas.
In Forex language, a sharp rise in price indicates a bullish breakout trend while a sharp drop in price indicates a bearish breakout trend.
A pullback is similar to a reversal, only that it is temporary.
Pullbacks are temporary reversals in the prices of trading instruments. Do you know what makes pullbacks cool? It's in their ability to provide an entry point for traders who want to enter a position when other technical indicators are indicating a buy.
Enough of the stories! Let's get dirty with some practicals...
The EUR/USD pair recently completed a full bearish run (sold heavily), and more of this trend is expected.
A drop below the 1.1660 price level is expected to trigger more drops in price (SELL), while a rise above the 1.1730 price level could trigger a bullish trend (BUY).
BIAS: Bullish Reversal/Bearish
Interpretation to the Practical Example
Forex Language: "The EUR/USD pair recently completed a full bearish run (sold heavily), and more of this trend is expected".
Layman Language: "The EUR/USD sold heavily, is still selling and is expected to keep selling".
Forex Language: "A drop below the 1.1660 price level is expected to trigger more drops in price (SELL), while a rise above the 1.1730 price level could trigger a bullish trend (BUY)."
Layman Language: "The pair is currently selling and if it continues to sell till it attains a price of 1.1660, it will continue selling. If the price of the instrument stops selling at a price of 1.1730 and increases, it could begin to sell massively".
Forex Language: Bullish Reversal/Bearish
Layman Language: The instrument might stop selling and start buying/it will continue to sell as it has been.
Phew, There you have it! You can now speak "Forex" and interpret our Forex forecasts like a boss. Want to test your new skills? Click Here to read and interpret our last week's technical forecast on the major pairs.
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