While fundamental analysis considers the factors that affect a country's economy and its effect on its currency, technical analysis predicts price movements and market trends by studyimg what has actually happened in the past. Technical analysis looks at the past performance and history of an investment and creates charts to be used as primary tools. It relies on data showing this history and current trends and patterns to make predictions of future market activity. It ignores the intrinsic value of the investment in favor of its statistical abstract. Technical analysis is only concerned with price movements and not with the reasons for any changes.
Technical analysis is used to identify significant patterns of market behavior. The history of the value of currency pairs is a matter of statistical record and can be easily accessed. Its supporters claim it is the only sure way of understanding the market and predicting its future based on the high probability that certain recognized patterns tend to repeat themselves on a consistent basis. This is especially true in the Forex market. Fans of technical analysis say that the economies of modern nations are so complex that they no longer can be accurately predicated. It is only in the study of the past history of the currency and the trends that are revealed that a possible glimpse of the future be found.
Forex technical analysis aims to support the investor in determining his views and forecasts regarding the exchange rates of currency pairs. The technical approach concentrates on prices and is based on objective tools like charts and tables, which neutralize external factors and emotions. It can and should be used to project movements in the Forex trade. Of course, in the end, it is going to be the investor's own preference that settles the question, and this is true of the market. Both fundamental analysis and technical analysis are mere tools that help make the decisions that in the end only the investor can make.
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