There are two kinds of Forex traders- the traders who use fundamental analysis and the traders
who use technical analysis.
I prefer the technical analysis, which ignores fundamental factors. Technical analysis is applied
to the price action of the market.
By using technical analysis traders can make short-term forecasts, which are very difficult with
fundamental analysis, more suitable to making long-term forecasts.
Technical analysts use different technical studies and interpret them to predict market direction
or to generate buy and sell signals.
By using charts in Forex technical analysis we can predict price movements.
You might think that reading the charts is very difficult, but you must know that FOREX charts,
as opposed to charts used for day trading stocks, are easier to interpret and use. The Forex charts
are reflection of a country's economy, which is slower moving and is more stable compared to the
future and daily drama of company reports, Wall Street analysts and shareholder demands.
Currency charts have also the tendency to develop strong trends, and although the Forex market is
volatile, it is more predictable than other markets. The good thing is that you have only a few
currencies to analyze, not tens of thousands of stocks.
The complimentary charting software provided by good brokers is sufficient for predicting
currencies pair's movements, but you must learn to read the charts and you must learn how to
interpret your technical studies.
As I mentioned the technical analysis in the Forex market is easier than in the other markets,
but it still might seem a difficult task for new traders.
