Most traders use the technical analysis to get the big picture of investment price history. The main use of technical analysis is to forecast price trends for future trading. There are many methods for forecasting the trading behavior but technical analysis is very much preferred.
Technical analysis use technical indicators which gives the graphical representation of price movements. Many traders rely on price charts, volume charts and mathematical representations of market data. They come to trade with the help of this data. Technical analysis is very disciplined method and it controls the emotions of the traders.
Technical analysis is based on three basic principles:
- market action discounts everything, it means actual price is reflection of anything that is known to the market and that could effect it
- price moves in trend. It is used to identify the market behavior. It is the graphical representation of the price movements
- history repeats it self. Patterns in the trading have been recognized and are collected for over 100 years and the manner in which many patterns are repeated is taken as conclusion.
Technical analysis is very important in forex trading. This analysis gives what you need to know at the time when you need to need. It is very important to understand the analysis process. The technical analysis process gives the meaningful information whenever you require.