Forex is like a game of tug of war, as there is a constant struggle between two parties at all times. While most people are familiar with Wall bull symbolizingStreet’s raging aggressive financial optimism and prosperity, few understand the bear representing pessimism and declining market.
A bullish or bull market describes a rising market that shows confidence and stability. Typical employment is high and the economy is strong, convincing brokers and investors of an upward market trend.
The term comes from bull fights when an opponent is thrown up into the air with the bull’s horns.
Whenbulls outweigh bears, indicators turn to the color green, representing a larger demand for currency and thus increasing its value.So when you spot a bullish market, you want to buy currencies for less and sell for a higher currency price.
On the other side of the spectrum is a bearish or bear market. This declining market creates insecurity among brokers and investors who expect trends to go downward. The term is used to signify that the market behaves the same way as a bear in fight by pushing down to the ground. A bearish market is visualized in charts with the color red.
Whenyou feel confident that the bear will soon overtake the bull and expect currency rates to fall, you would sell short. This process may seem unclear for many people, so let’s break it down. The simplified idea is that you borrow currency from your broker and when the currency price falls, you pay back the broker at the lowest price, thus making a profit on the difference. The process is completely automated. We recommend trying the Sell Short option in our trading simulator to see exactly how it Works.
The candlestick chart resembles a lot to the bar chart, but the major difference is the relationship between opening and closing prices. Unlike the bar chart, the candlestick chart emphasizes more on the relationship between the closing price and the opening price of the same trading day.
The dual nature of the financial market is portrayed in the Bullish and Bearish market.
Bullish(bull market) is the rising market that shows confidence and stability and convinces brokers and investors that the trend will be upward. The term is used to signify that the market fights like when the bulls fight and throw their opponents up in the air with their horns.
Bearish(bear market) is the declining market that creates insecurity to to brokers and investors who expect that the trend will be downward. The term is used to signify that the market goes down like when the bears fight, their opponents are being put down.
This figure shows how the candlestick chart looks.
Time frame in chart
The market can be analyzed in several time frames: minutes, hours, days, weeks, even months. It may often seem that these indicators are contradictory, but they aren’t! You just need to combine the readings. Analyses of longer time periods indicate particular trends, ignoring minor accidental changes, whereas daily and hourly charts are used for choosing the perfect timing to open and close a position.
Let’s have a look at the daily chart above. What do most novice traders do when they see such a curve? They assume that it’s the beginning of a downward trend and bid on the drop of the currency exchange rate. And they’re wrong!
Now let’s look at the same currency over a longer period of time (above). We see that the day shift was a short term fluctuation and that the trend is bullish (upward) and not the other way around as one might consider by looking at a smaller time frame.