Firstly - Analyzing the economy of the countries. Look at the global macro fundamentals. Through this study, we know which country has stronger economy and which country has weaker economy.
By examining interesting rate, employment, inflation and growth, we can know if a economy is good or bad.
A strong economy will often have a strong currency and a weak economy usually have a weak currency.
Immediately, we will know what currency to buy and which currency to sell.
In Forex, we need to trade a strong economy against the weak economy and not trade the price.
Secondly- Identify pockets of liquidity on price chart.
Why liquidity? When big order trader decide to long or short, their orders often go by a few hundreds of millions, if not billions. With huge order like these, in order to get in or out with best price, they need to get in and out at a price level which has high liquidity.
Simple?
