What is Technical Analysis?
Technical analysis is the study of historical price data to determine the likely direction of a currency or market.? Technical analysts use a mixture of short- to long-term charts and raw data to attempt to spot patterns and recurrent price movements.? Technical analysis is often used to help traders understand the long term: whatever the sudden fluctuations in a currency price or market, the long-term movement is believed to be essentially knowable.
Technical Analysis in a Nutshell
Technical analysis rests on the belief that all traders need to know about a currency price or market movement is expressed in historical data.? External events and news announcements, even when explicitly economical or financial, are not believed to be of as much importance as the ability to spot recurrent patterns and movements in past market data.? In its purest form, technical analysis is the opposite of fundamental analysis, which rests on the belief external events and news affect the valuations and the overall market.
Fundamental Analysis
Economic news, such as interest rate announcements, GDP figure statements, unemployment figures and inflation levels, are some of the major Forex fundamentals.? The impact of events and / or announcements is believed by fundamental analysts to be of more importance than studying the past.? After all, new events and announcements have not happened before, making their impact essentially not known.
Source: http://www.thegwr.co.uk/forex-currency-trading-technical-analysis
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