3 Principles of Forex Technical Analysis

Forex (also known as foreign exchange or FX) technology analysis, which is the most widely used method of trading currency in the world, is based on three basic principles. The first principle is that all things are discounted in the Lfx market action. Real market prices are a reflection of everything known to the market, which may have an impact on price movements. Genuine technical analysts are only concerned about price movements, not the cause of any changes.

Second, moving prices down on trends. Prices can move in 3 directions, that is, they can go up, down, or down. Once a trend in any of these aspects is in effect, it will usually continue, and create a trend. Technical analysis is also used to identify patterns of market behavior that have long been recognized as important. These patterns will generally behave in the same way as in the past, as long as you can identify them and make them what they are. They have been consistently proven in predicting future actions. If you are able to accurately identify the chart patterns and what the next movement of prices is, you will be able to limit the amount of your losses and maximize your profits.

Third, history repeats itself. Technology analysts believe that investors collectively repeat their investment behavior patterns. They similarly act and react to different types of stimuli, such as economic data or other news. Since investor behavior repeats itself so frequently, it is possible to chart the identified market patterns for analysis.

Therefore, a businessman who is a pure technology analyst will not be concerned about market news. He used charting patterns as the market took into account the news and acted accordingly. Although widely used, this method of business has some disadvantages.