FOREX Advantages of Technical Analysis

The use of most patterns has been widely publicized in the last several years. Many traders are quite familiar with these patterns and often act on them in concern. This creates a self-fulfilling prophecy, as waves of buying or selling are created in response to “bullish” or “bearish” patterns.

Advantages of Technical Analysis

• Technical analysis can be used to project movements of any asset (which is priced under demand/supply forces) available for trade in the capital market;

• Technical analysis focuses on what is happening, as opposed to what has previously happened, and is therefore valid at any price level;

• The technical approach concentrates on prices, which neutralizes external factors. Pure technical analysis is based on objective tools (charts, tables) while disregarding emotions and other factors;

• Signaling indicators sometimes point to the imminent end of a trend, before it shows in the actual market. Accordingly, the trader can maintain profit or minimize losses.