Using Technical Analysis

Technical analysis is probably the most popular form of financial market analysis, since it can be applied to literally any market from currencies to stocks to commodities. It has to do with examining charts, price data, and using different mathematical indicators to try and come up with accurate trading signals.

The different technical methods that this article will cover are support and resistance, fibonacci retracements and profit targets, momentum oscillators such as the Relative Strength Index (RSI), and moving averages. While this is by no means a comprehensive guide to forex technical analysis, it will introduce you to some of the most popular trading tools and allow you to acquaint yourself with the notion of analyzing price charts.

In a sentence, technical analysis is the study of historical price movements to try and predict future results. While this is not always 100% accurate, it is based on the simple premise that all market movements are caused by real people, and human psychology and investment behavior tend to remain consistent. And because technical analysis is widely practiced by so many traders, with many of them even following the exact same indicators such as support and resistance lines, there is an element of self-fulfillment involved.