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Bulls, Bears And The Foreign Currency Market
In many ways, the foreign exchange has much in common with the stock exchange. Market trends, bulls and bears are all terms which are freely bandied about – terms which leave the uninitiated scratching their heads in bewilderment. What does it all mean?
Most customers coming to currency brokers are familiar with market trends in commerce, but when it comes to foreign currency they are at a loss. It is true that currency trends are difficult to understand or predict.
On the foreign exchange, market trends relate to the prevailing performance of currencies – the direction they move in over a certain period of time. These time periods may be secular, or long-term; primary, or mid-term, and secondary, or short-term. Secular periods are divided into primary sections.
Currency brokers like us at Pure FX study primary trends particularly carefully, using technical analysis. This is the identification of currency exchange rate patterns in order for predictions to be made. Typically, a currency will fluctuate up and down on a daily basis, meaning over a short period of time the net change may look as if it is zero. Over a longer period of time, however, a trend may emerge. Using specialised charts, it may be that the overall direction of those up-and-down fluctuations is up or down. On a secular scale there may be a cyclic progression, perhaps around election times. This is why it’s important to study data over varying time periods.
The bull market and bear market simply relates to these upward or downward trends. The bulls and bears are the currencies following those trends.
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