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A forex forecast is based on the fundamental analysis of economic strength of a particular monetary unit. A forex forecast is the prediction made based on economic indicators such as the economy, political, and social structure of a nation. This is because a monetary unit, or currency, is really a representation of a particular nation's economy. So, the economic health of a nation controls the value of the nation's currency. A forex forecast takes multiple components of economic health to construct a forecast model which predicts the movement of foreign currencies.
A forex forecast model takes into account the basics of the Dow Theory where: price reflects market forces; price movements occur in trends; trends are comprised of stages; the volume of trades indicates the market.
There are few limits to the amounts and types of information that can be used for a forex forecast. The forex forecasts rely on fundamental and technical analysis to focus on either long term or short term currency exchange rates and economic forces. The forex forecast model differs, however, from a fundamental analysis in that it is based on technical information that predicts the points at which a dealer or agent should enter and exit a trade. This is how dealers and agents interpret the unending amount of economic and market cycles to determine points at which one buys and sells a specific monetary unit. In short, a forex forecast is a prediction of entry and exit points in the foreign exchange currency market.
The forex forecast is strongly related to the trends in trade. This is the length of time that a price moves in an upward or downward slope. The price trends tend to be cyclic in their nature, especially over longer periods of time. There also comes a point where the entry and exit price points that develop the trends either support, resist, or create barriers in the action of global currency trading. This is similar to the standard theory of supply and demand—there becomes a point where the value of a product, currency, or stock cannot go higher because there is an abundance of trade. There is also a point where it cannot go lower because there is a succinct lack of trade. The forex forecast models attempts to predict entry and exit points and guide global currency trading towards advancing market trends and wealth.