Technical forex analysis is really just the study of supply and demand for a given currency pair in an attempt to determine what direction its exchange rate will move in the future, despite all the fancy and exotic indicators that it consists of. Forex technical analysis attempts to understand and make use of the emotions that drive price movement by studying price movement itself, as opposed to the fundamental catalysts for such emotions. Forex market technicians believe that a price chart reflects the emotions of all market participants and their beliefs about the underlying fundamental variables; therefore, to the market technician there is no reason to concern their self with such fundamentals.
Forex fundamental analysis can be useful because it is these fundamental market drivers that are the catalyst for all price movement. However, to truly make relevant use out of global economic data at the retail level would involve a level of involvement that would essentially require you to have a second full-time job, as well as access to up to the minute and in-depth information. Since most retail forex traders do not have such access to information or available time, it makes more sense to learn to trade forex mainly based on forex technical analysis with a base of understanding of the most important fundamental economic reports. It is a very good idea to at least be aware of the release dates and times of the most important economic reports each month as these reports can cause very volatile forex market movement.
While forex technical analysis can be a very effective and efficient way to make forex trading decisions, it also can be a very deceptive and confusing analysis technique if you make it more difficult than it needs to be. Many traders get caught up believing that they need a hundred different indicators to be consistently profitable, simply put, there is a ton of forex technical analysis trading tools and it can be hard to know which ones to use. Typically, when it comes to forex technical analysis, simple is better, simple price patterns, candlestick analysis, support and resistance, retracements, and other similar technical analysis tools that have been around since the beginnings of financial market speculation are the ones you want to stick with. These tools have been proven to be successful market analysis techniques over many decades, falling prey to the latest trading “robot” or indicator scam system is going to do nothing but confuse you, cause you to lose money, and put you on a never-ending search for some non-existent “holy-grail” trading system. To learn how to trade with effective and simple technical analysis methods, click here: learn forex with Nial Fuller.