The Importance of Technical Analysis in Forex Trading

If you want to be a successful trader in the forex market, one of the issues that you must consider is familiarizing yourself with different kinds of analysis methods. One of the most commonly used methods of analysis is technical analysis. Technical analysis varies depending on the market where it is used. Its usage in the currency markets, however, is quite consistent. In fact, the use of technical analysis in this market seems to be the predominant activity. So, why is technical analysis so important in forex trading? Understanding market behavior Before we can dive into the importance of technical analysis, we need to understand the market behavior. All financial markets have a basic characteristic – they can either have trending or ranging signals. Trending markets are those that have signals moving either up or down but never sideways. When prices change, the general trend of the market is affected. Even though prices might change slightly, the trend in the market is barely affected. The ranging market, on the other hand, is one that has prices moving back and forth from high to low. Higher prices lead to the development of a resistance line and this prevents further increases in…










