forex market charts
Friday, September 3rd, 2010
There are two major methods used to analyze and forecast the behavior of the Forex market - Technical (chart) analysis and Fundamental analysis.
Forex Fundamental analysis is a type of market analysis which involves studying of the economic situation of countries to trade currencies more effectively. Most FOREX traders rely on analysis to make plan their trading strategy. The other common form of analysis is technical analysis.
Both are distinct in their own ways, but on the other hand both are considered useful forecast tools for any Forex trader. They work towards the same goal - in predicting price or movement of currency in the forex market.
In technical (chart) analysis trader studies the effect while the fundamentalist studies are about the cause of market movement. The more successful forex traders have been seen to combine both types of analysis for results that are fine tuned further.
Forex technical (chart) analysis, forecasting price movements & future market trends are based in charts study of past market action. Forex technical analysis is more focused on what has actually happened in the market, instead of what should ideally happen. It takes into account the price of currency and the volume of trading, and then charts are developed from such a data which is used as its primary tool. One big advantage of technical analysis is that the forex trading analysts can follow many markets and are capable of trading currency simultaneously.
Chart analysis is built on some basic and yet crucial principles. (i) Market action discounts everything! (ii) Prices move in trends, and (iii) History repeats itself.
There are five categories in Forex chart analysis theory: (i) Indicators (oscillators, e.g.: Relative Strength Index (RSI) (ii) Number theory (Fibonacci numbers, Gann numbers) (iii) Waves (Elliott wave theory) (iv) Gaps (high-low, open-closing) (v) Trends (following moving average).
For an aspiring forex trader, learning technical analysis skill is a major factor and her/his success depends on his in-depth knowledge to a great extent. One should also study about the Forex technical analysis tools while studying about Forex technical analysis.
Copyright 2009 - Vahid is a forex trader and forex market analyst. His website is the most reliable reference for advanced, intermediate and beginner forex traders: Fundamental And Technical Analysis
How To Start Trading The Forex Market? Part 6 of 8
