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<h1>Technical Analysis of the FOREX Market</h1>

In FOREX trading there are two common types of analysis that
most traders utilize, they are fundamental and technical analysis.
Fundamental analysis attempts to predict currency movement based
off of political and economy indicators. Technical analysis uses
historical economic information to predict changes in the FOREX
market. This is the first of two articles that will explore
technical analysis.
Technical Analysis is based on the following assumptions:
1. Price movements are a result of combined market forces.
Political events, economic conditions, seasonal fluctuations,
supply and demand are all things that can effect currency prices.
Technical analysts do not concern themselves with why the market
moves, they are only interested in the movements themselves.
2. Currency prices on the FOREX market follow trends.
Predictable consequences have been linked with many recognized
market patterns.
3. Historical trends can be used to predict current price
movements. Data on the FOREX market has been collected for the last
100 years, over that time certain patterns have become emergent.
Human psychology and the way people react to certain circumstances
are the basis of these patterns.
Most traders consider technical analysis to be of critical
importance even though they may also use fundamental analysis to
support and confirm the strategy suggested by technical analysis.
Unlike fundamental analysis technical analysis can be applied to
many different currencies and markets at the same time. Since
fundamental analysis requires detailed knowledge of the economic
and political conditions of a certain country it is nearly
impossible for any single trader to perform proper fundamental
analysis on more than a few countries.
For the beginning trader the complexities of technical analysis
may seem overwhelming and they may even wonder if it is actually
necessary. If you wish to be successful at FOREX trading you must
have a strategy. Any strategy can work but technical analysis has
been proven as a reliable and effective method of predicting market
changes. Many forces can effect currency prices though so technical
analysis is no guarantee, most successful traders utilize a
combination of technical and fundamental analysis.
Any quality online FOREX broker should be able to supply you
with a large variety of online charts for technical analysis. You
can purchase in-depth professional charts, there is usually a
monthly fee involved in gaining access to this information. There
is also free software available to help you with charting. Charts
provide different snapshots of timeframes and usually can also have
analytical overlays. These charts will provide a broad over view
and can also be zoomed into the tick level. Good charts are updated
in real time. These may be available on your brokers site or could
be part of their software.
You should learn the market and study trends before for a period
of time before you begin actively trading. Most brokers will
provide you with a practice account where you can place "paper
trades". Paper trades are just practice trades where no real money
is made or lost. They act just like a real trade though so you can
see exactly how your trade would have turned out if you had placed
it for real. This allows you to become familiar with your brokers
system and software as well as learning about the market and how it
moves without risking any money while you learn.
The second part of this article will explore the various charts
and technical indicators.

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