Technical Analysis Of Foreign Exchange Charts Is Only A Guide, Not A Crystal Ball

Technical analysis of forex charts is the using of previous technical data to make decisions on what might happen in the foreign exchange market. It is understanding the various forex signals, such as moving averages, stochastic, and MAC-D indicators. As well, the trends of past flow of the foreign exchange charts are used to predict the future.

The technical analysis is based on numbers, past prices, but you can use indicators that represent the calculations of these numbers, without doing the math yourself.

We are looking at what forex prices were to anticipate what prices will be. Forex charts come in many configurations. You get to determine which forex signals you view at any given time. Whether you use candlesticks or not, it is what you can ‘see’ making patterns that can be anticipated. Generally the forex signals are produced by a formula which can calculate the likelihood of an event.

All technical analysis and forex charts are about history. They relate only to what has happened. Their forecasts of future foreign exchange prices must be taken as a guide only. They serve to explain what has happened in the past, they do not explain the future.

Another aspect of the technical analysis of foreign exchange charts and forex signals is the scale of time over which you focus. Many people like long-term trends, whereas some are more like day traders and get their forex charts for short periods of time. You can get forex charts by the hour day, week, month or year. The activity that was so significant to you yesterday, may just be a blip in a long-term foreign exchange chart. All these forex signals need to be understood in relationship with each other.

For more effective technical analysis you need to understand the patterns of the foreign exchange charts. And whether they indicate the price is in a trending pattern or a trading pattern. Prices do tend to flow, they have trends, even cycles. This is even more apparent in the longer time line forex charts.

Analysis is a very common process. You should be cautious in the intrinsic value of the information. It is history, it is not the future.