Forex technical analysis is the process of assessing the market conditions and choosing whether to buy or sell a specific currency pair. Analysis in the forex market is commonly divided into two main categories; Technical and Fundamental analysis.
Technical Vs. Fundamental Analysis Explained
Technical analysisis based on the study of historical price action in order to identify price patterns and predict the future movements in the forex market through the use of technical indicators and historic price patterns.
Although forex technical analysis depends mainly on charts and patterns, it also includes aspects of behavioral economics and risk management. The main goal behind technical analysis is identifying trading opportunities and predicting price direction.
Core Concepts of Technical Analysis
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History repeats itself:
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Prices move in trends:
It is basically believed that human emotions are the main driver of prices in the financial markets. Therefore, historic price action is likely to be repeated once traders experience the same emotions.
This concept reflects the fact that prices do not move randomly, as they follow specific trends. The objective of technical analysis is to identify these trends and predict future trends.
Why Do Traders Use Technical Analysis？
Technical price analysis is essential for identifying the overall price trend, entry and exit points for every trade, and support and resistance levels. Technical analysis helps you to determine not only when to enter a market, but more importantly when to get out.
Check out more on our Technically Analysisfor more info on analysis tools and how to use it effectively for your trading!
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