Technical analysis trading: What is this and why is it important?

ForexNewsNow | Published on August 25, 2010 at 12:31 am

Technical analysis trading - a pile of U.S. dollarsNEW YORK (Forex News Now) – Technical analysis trading in forex is trading that is executed according to attempts to forecast future price movements by examining past market data.

By engaging in technical analysis trading, FX traders seek to “big picture” on a currency pair’s price history. Fundamental traders will also pay attention to technical analysis trading, by glancing at a daily chart, for example, in order to see if they are selling at a good FX rate.

Technical analysis trading is based on the use of indicators: volume-based, moving average-based, volatility-based and ranging / oscillator-based. Another popular tool in technical analysis trading is Fibonacci retracement.

In technical analysis trading, FX traders assume that most market fundamentals are reflected in price data; as such, other fundamentals such as moods not examined in technical analysis trading.

It is also assumed in technical analysis trading that history repeats itself, and that it does so in fairly predictable patterns. In technical analysis trading, these patterns are known as “signals.”



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