Hi guys
I was following this site last year, but didn’t have the time required to commit to forex as I needed. I am having another look at forex, and Ive some general terminology questions that Ive never managed to quite get my head round.
When Im looking at the EUR/USD chart, I have time along the x axis, and numerical values going up the y axis. What do these values mean ?
Are they Dollars per Euro ?
First currency = base currency
Second currency = quote/counter currency
In other words: it’s the value of 1 EUR for X USD
ok, so when a report says that the EUR/USD “edged lower” , does this mean that the rate of dollars per Euro is going down (eg from $1.30 to $1.29) ?
and if so does this mean the dollar is strengthening against the Euro and the Euro is therefore weakening against the dollar ?
It means that the value of one euro, priced in U.S. dollars, has declined from $1.30 to $1.29 (Is this what you mean?).
In any currency pair, the cross-currency is the “price” of one unit of the base currency.
Examples: [B]GBP/USD = 1.5000[/B] means £1 = $1.50, and [B]GBP/JPY = 140.11[/B] means £1 = ¥140.11
Exactly right.
“It means that the value of one euro, priced in U.S. dollars, has declined from $1.30 to $1.29 (Is this what you mean?).”
Yes thats what I meant, thanks. Im just trying to get my head round the language as it seems there is always an equal and opposite statement could be said for most things. Getting there slowly :-).
I have a reposrt where it says
In the bigger picture, the three wave consolidation from 2008 low of 1.2329 has completed at 1.5143 already …
Q. the use of the word consolidation. Does its use here mean that the price has recovered perhaps to what it was at some previous point ?
The term “consolidation”, as applied to a price series, usually refers to the price settling into a clearly bounded range. After a long uptrend or downtrend, a price may find a “comfort zone”, so to speak, where it appears content to remain between an obvious support level (below) and resistance level (above). This is a resting phase, before the price breaks out of its range, and begins a new trend.
The prices you mentioned are obviously EUR/USD prices. The report you are quoting refers to the long-term low made in late October 2008, and the long-term high made in late November 2009. You have to look at a very long time frame — say the past 10 years — in order to see the “consolidation” your report is talking about.
As for the reference to three waves, I can’t tell looking at charts what that writer is talking about. It sounds to me like you’re reading some Elliot Wave stuff. Wave-counts have never been my thing. And, in the case of your EUR/USD “consolidation”, I’m totally lost trying to count three waves.
Sorry for the long-winded answer.
No its great, your answer makes sense.
Its the EUR/USD chart I have decided to learn with as it seems to be the most popular.
thanks for now. Im expecting the book forex trading for dummies to arrive any day. ive bought it as there are what seems some pretty basic ideas and terminology I cant get my head round.
now that I have more time I intend to learn about the thing in a bit more detail starting as basic as i can.
thanks again
Mike