Technical Analysis For Forex Traders

[Malvika]

Though the past movements cannot guarantee the future price movements all the time but the science on forecasting of the price movements by using past data can predict it more accurately most of the time. And this is the basic of technical analysis. It’s a theory to determine present trading situations and price movements while looking at the price movements of history.

Forex specific aspects

Technical analysis discounts everything in Forex. The main reason of technical analysis in Forex trading is that all current information of market is reflected in price. That’s why the price action is all a trader needs for successful trading.

· Minimal Rate Inconsistency- There is a plethora of players in Forex market like large banks or hedge funds who has advanced monitoring systems to check inconsistencies between the varieties of currency pairs. The Forex trading analysis presumes that all the major factors like ecological, political, psychological or social, have already been factored into the rate of current exchange by the market. The trend and capital flow are much more important than trying to identify a misprice rate with so many investors and so much money exchanges in a daily basis.

· Trend or Range –The technical analysts depict whether a given currency pair will trend I a specific direction or it will travel sideways to become range-restricted. It is usually done by drawing trend lines that connect historical level which have inhibited a rate from going higher or lower. Major currency pairs like USD/EUR, GBP/USD, USD/JPY etc. have displayed greatest trend features and currency pairs without USD are range bound. A technical trader must be aware of trend and range. In the field of currency trading, chart is of great importance.

· Indicators –To predict future paths of exchange rates, many indicators with support and resistance are commonly used in technical analysis. Indicators like Bollinger Band, moving averages, stochastic etc. are popular and are used in conjunction with other indicators and patterns of charts patterns.

Remember the technical analysis is very much subjective. Having an eye on same charts and indicators doesn't mean that traders will come up with the identical idea about price fortunes. It is vital to understand the concepts and you can look at the past data to follow and assume the current market trends. Technical analysis helps in many other ways to gain a hold over market trading. It is useful in both stock and Forex trading.

 

[Priya]

I always follow the currency technical analysis given by leading Forex experts, so that we can trade a bit accurate on the currency pairs.

 

[andengireng]

EURGBP today as we see here, the price is in bearish trend, so it is good for you if you just follow the trend, you can open sell position when the price breaks support area at 0.8386 with potential target up to 0.8367

 

[Cervicorn]

Technical analysis is a method of trading that analyses market action and trends rather than fundamental economic factors. It can be used in the foreign exchange market, or to trade in stocks, futures, or options. Technical analysis is based on the concept that markets can be predicted by analysing their past performance.

 

[directx0000]

How about price action or naked chart analysis? Which one is better?

 

[Pinking]

Technical analysis is important for short term traders. Traders analyse the market using charts, they’ll be able to pick the right trend and control the risk level in their strategies. Every trader must have basic knowledge of technical and fundamental analysis.

 

[RodrigoRT7]

I believe that the NNFX methodology is very useful. use two confirmation indicators + baseline + output and volume indicator

 

[andengireng]

USDJPY today as we see here, the big trend is bearish, so it is better if you open buy position when the price breaks support area 126.54 with potential target up to 50 pips below

 

[Reticular]

For short-term traders, technical analysis is crucial. Traders use charts to analyze the market, allowing them to identify the proper trend and manage risk in their plans. Technical and fundamental analysis are essential skills for each trader.

 

[Magnificent]

Technical analysis works great for short term traders. They predict their next move based on the readings on the charts and graphs. They follow the pattern of the price movement and are prepared to change their plan if necessary.