Learning Basic Forex Technical Analysis for Beginners

Basic Forex Technical Analysis for Beginners

Let's start with the assumptions that underlying Forex Technical Analysis. In this case I would take an extreme approach so that you can understand how a forex technical analysis used in obtaining gains in forex trading. But in real trading, you can combine both forex analysis ( fundamental and technical ) in order to obtain the best trading system that suitable for you.

The chartist ( those who perform forex technical analysis ), believe that they can figure out the patterns of price movements in the exchange rate with the future exchange rate movements based on the observations in the past. In short they are holding this jargon : " History always repeats it self. " Philosophy is of course contrary to the fundamentalists in which investment decisions on the value of a currency is based on the fundamentals of economic, political and monetary country concerned.

The main weapon of the technical analyst are charts ( charts - that's why they are called chartist ). Through this chart they can see the ongoing trend, temporal trends , the volume of transactions and the psychological levels that exist. If you have been able to figure 4 it is, of course, a great advantage would soon be flowing into your pockets. Let me re :

1. Market Trend
2. Volume of transactions
3. Psychological levels ( support and resistance )
4. The period of time needs

Indeed, the goal of the chartist is predicting to those four things. But now the question is how accurate our ability to predict the price ? Well that's what it must be constantly on the grindstone every day. There is no single perfect method of both fundamental and technical. Experience and self confidence holding central role here.

Is technical analysis has weaknesses ?  Of course. Nothing is perfect and no absolute 100%. Let me summarizes some weakness of this Forex Technical analysis.

Weaknesses in Forex Fundamental Analysis :

It takes time to obtain the information . 

Often it is subjective because it involves a lot of opinions.

More suitable to be applied to the long term trading period.

Difficult to apply in an inefficient market.

Weakness in Forex Technical Analysis :
It requires a lot of data to support accurate prediction.
Relies heavily on the ability of chartist. 

Each chartist have different methods and each of them is not necessarily suitable to be applied to each other.

Well that's it for an introduction to technical analysis. In the next section we are directly acquainted with the chart. You definitely do not want too much information that ended up not making you dizzy or more feel complicating and confusing.