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Main suppositions of Technical analysis

The aim of technical analysis is to forecast price trends in future basing on the historical data along with the one of the volume. Technical analysts are sure that any fundamentals and even expectations have affection to exchange rates changing being the factors of the market. Any private investor can have an access to the technical analysis tools in order to compute his or her trading decisions. However, we cannot state that these tools figure out unreliable estimations. Technical analysis has been in use for centuries, which is why its premises based on the experience and prolonged observation can be considered quite reliable. Japan traders started using the technique of candlestick. This is still popular in the 18th century and thought of as the oldest one.

The end of the 19th century gave birth to the Dow Theory that used the writings of Charles Dow, who was an editor and co-founder of Dow Jones. Recent decades gave a number of new tools along with the amelioration of the old ones that was caused by the development of computer-based technologies.

There are three suppositions laying at the basis of technical analysis:

  • Everything should be considered at the market movement;
  • Price movement has a purpose;
  • History is to repeat its occasions;

Relying on these statements, technical analysis can be described as the mathematical analyzing of historical data and carrying out price forecasts.

The technical analysis is aimed at the fact that there is a certain direction or a chart pattern for the price movement, but not at finding out the reasons of such movements, like complicated business environment, low earnings and level of management and other fundamental factors. Anyone can gain the profit by posing himself in the trend direction, from the point of view of technical analyst. In the uptrend situation, you should consider a buy decision, whether if the downtrend occurs you should try to sell. Technical analysts use different patterns in order to create a price chart that will suit the future market and the price would follow the pattern.

Forex Trader should consider technical analysis as a key factor for success. Technical analysis basic overview is historical market prices analysis for the purpose of predicting price trends or having an adequate picture of prices movement in future. The concept of Forex Technical Analysis is made up of mathematical equations along with other technical applied towards Forex prices. Deep knowledge of the Forex Technical Analysis techniques is required for profitable dealing with Online Forex Market. The traders using technical analysis invest their money thoughtfully and monitor the daily prices movement precisely that lets them reach the profit. You can choose some basic technical indicators offered at our Forex Technical indicators page among lots of other ones. You should keep in mind that theoretical knowledge added to the thoughtful strategy gives the key to good results and positive trading. You should not ever use methods that you do not understand clearly. There is always a choice from a number of methods offered, so you can use the one you are good at and invest adequately for successful Forex trading.