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Is the Forex Australia Market Cyclical?

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If your intention is to trade on the forex Australia market, it is important that you know all you can about the market.  There are some individuals who state that all financial markets work randomly, but there are others who state that the forex market operates in cycles.  Some traders believe that the forex Australia market works in both manners and to trade effectively in this market, you need to know which is true.

Is It Random?

There are a lot of traders who feel that the forex Australia market is random.  These traders generally do not trade on the market because of this belief.  The ones who venture into trading view their trades more as a gamble and place their success down to chance and luck.  It can be said that the market works in some random ways, but this does not mean it is always random.

The times when the market is random is when there is a sudden shift that no-one could predict.  These are the events that believers of this theory look at.  Of course, there are a number of ways that this theory can be disproved.

Technical Analysis

One of the ways of disproving the theory of random markets and proving that markets work in cycles is technical analysis.  This analysis method looks at the forex charts to see what is going to happen.  If the market was truly random, the charts would have no purpose as they would not be able to help you.  However, if the market were cyclical, charts would be able to help you.

It can be seen with many currency pairs that the market prices move in a cycle.  This is why traders are able to trade in a range and within set support and resistance levels.  There are also chart patterns that can only come about if there is a cycle to the price movements.

Fundamental Analysis

An alternate method to disprove the theory of the market being random is by the use of fundamental analysis.  If the market was random there would be no need for fundamental analysis because the news releases would not affect the market.  However, news releases do affect the market in a mostly predictable fashion.

There are times when the market does not react in the way that you would expect.  This could be due to a number of factors including other information which mitigates the effects of the news release.  The news may also not have as high an impact as you may expect on the market.

Is the forex Australia Market Both?

A lot of traders feel that the market is both random and cyclical.  While you can predict what could happen on the market there is no way to be completely sure.  This means that there is a level of randomness to the market otherwise you would be able to predict with certainty.  There are also times when the market does not react in the expected manner and this can be put down to the random nature of the market.

 

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