What is technical analysis in the Forex market?


Technicians either (technical analysts) use technical analysis in the Forex market, trying to predict future trends and prices. Their future forecasts in the foreign exchange market are mainly based on a study of previous price charts. They review current price charts and trends and use technical analysis in the Forex market to find distinctive similar patterns on charts that have occurred in the past, in the hope that current prices and trends will be similar to the past.

However, some analysts insist that sample charts from history cannot be used for future predictions, and that patterns can only be random because of the uniqueness of human participation in the market.

This still does not prevent technical analysts from trying to use previous chart schemes to forecast the future foreign exchange market. There are many types of chart models that they use in their predictions.

Analysts also use indicators and oscillators in technical analysis of the Forex market, separately and in conjunction with the study of charts, to predict changes in trends or price patterns.

Basically, indicators are a series of data points used to forecast currency movements and are calculations that are based on the price and / or volume of securities to measure trends, cash flow, momentum and volatility.

Indicators help analysts figure out the strength and resilience of a trend, whereas price charts will help analysts identify whether trends should follow.

Technical analysis in the Forex market is created around these three basic principles.

1. The stock market reduces everything! Basically, price is based on everything that affects the market, such as policy, market perception and supply and demand. Technical analysis does not worry about what makes the price move up and down. It only worries his real movement.

2. Prices are moving in trend. Whenever there is a noticeable movement of the market, technical analysis is used to calculate the patterns of this movement. Under certain patterns, there is a high probability that the forecast will be good. There are also patterns that can be predicted on a regular basis.

3. History repeats itself. Graph patterns have been known in technical analysis in the Forex market for over a century, and human behavior has not changed much during this time. Since the sample charts have not changed much during all this time, it is assumed that they will not change too much in the future.