Everyone is talking about forex these days, and there are big reasons that explain this huge interest expressed by people all around the world who are willing to learn and enter the world of forex trading. Forex is a huge market with an almost continuous activity all year long, week after week, hour after hour and with the particular characteristic of showing highly marked trends, making it an easily tradable market if you know how to read those trends.
In order to correctly read the forex charts you need technical analysis; this is defined as the study of the price and trading history of a particular currency pair. TA stands in the opposite sidewalk to what's known as fundamental analysis, which is defined as the study of the actual nature and characteristics of the stock or a particular currency in the case of forex. Although some investors combine the two types of analysis in making investment decisions, there are techniques originated from the exhaustive studying of past price charts and trading action during long trading periods that allow the use of only technical indicators in order to have profitable trades.
Technical analysis relations on the empirical evidence to assert that prices do trend. This assumption that prices must trend in the forex market evolution with time is the most important concept in technical analysis.
Technical analysis has many different methods and tools in its arsenal; they all share the characteristic of relying on the assumption that price patterns and trends exist in the markets. Of course, technical analysis is not 100% accurate, but a correct analysis by these methods and techniques will give results that are correct much more often than they are wrong. And this is the basis for building a profitable forex trading system.
Source by Adrian Pablo