| Knowing the fundamentals or the news does not | | | | Because we all have the same facts to look at and |
| guarantee currency trading success – You need | | | | we all draw different conclusions from what we see |
| to be able to measure investor psychology and how | | | | – its is humans that determine the price of |
| they perceive the fundamentals, to get the big | | | | anything and this is the key to why technical analysis |
| picture and that’s exactly what forex technical | | | | is so powerful it gives you the whole picture. |
| analysis does. | | | | The fundamentals and how humans perceive them. |
| Many traders don’t fully understand the | | | | Some of the largest price moves in history have |
| advantages of technical analysis – and refuse to | | | | occurred with little or no change in the fundamentals |
| believe that it works but it does - so let’s look | | | | and any market is most bullish at a market top and |
| at how and why it works. | | | | most bearish at a market bottom – this is |
| Forex Technical Analysis Defined? | | | | investor psychology at work. |
| Is defined as the study of price action through the | | | | If you use technical analysis you are trading the |
| use of forex charts - for the purpose of identifying | | | | reality and you don’t have to guess or predict |
| price trends - Forex technical analysis uses the | | | | it’s clear for you to see from your forex charts. |
| following equation: | | | | You don’t need to let your emotions get |
| Market Perception (trader psychology) + | | | | involved or listen to the opinions of experts you |
| Fundamentals = Price Movement | | | | simply trade on what you see. |
| Forex technical analysis assumes that all known | | | | Of course because human nature is constant you can |
| fundamentals are instantly reflected in price action | | | | trade repetitive chart patterns that reflect human |
| and with the news available to all in a split second this | | | | psychology and if you look at the price history of |
| is true. Forex technical analysis therefore | | | | any currency you will see them. |
| concentrates on the price action. | | | | Technical analysis is easy to learn and takes very little |
| So technical analysis does study the fundamentals | | | | time to apply but if you use forex charts correctly |
| and more importantly how they are perceived by the | | | | you can make huge long term gains. |
| participants. Many forex traders claim that technical | | | | It’s an art not a science and you need to use |
| analysis can’t work - because you need to know | | | | the right tools and that will be the subject of the |
| and study the fundamentals in depth - this is simply | | | | second article in this series. |
| not true and won’t help you. | | | | NEW! |
| Why? | | | | |