Technical analysts track historical prices and traded volumes in an attempt to identify trends. They use graphs and charts to plot this information, and for this reason are sometimes referred to as chartists.

By attempting to quantify historical performance, technical analysts seek to identify repeating patterns as a means to signal future buy and sell opportunities. Technical analysts believe that the impact of events such as interest rate changes or the latest inflation reports are automatically factored into the currency price through the natural actions of buyers and sellers within the market.

Technical analysts believe that prices move in trends and price movements generally follow established patterns that can be partly attributed to market psychology or, more euphemistically, " herd mentality ". Market psychology is based on the widely-held belief that participants in markets, who for the most part have the same goals and objectives, react in a similar fashion when faced with similar situations.

Technical analysts look for trends as a way to predict future prices. There are three self-explanatory trends:.

Technical analysis continues to evolve, and most trading platforms offer a host of tools to automate the calculations required to plot prices.

We will review some of the more popular technical tools in the following sections. This lesson is intended to introduce you to the theories of technical analysis and some of the most common chart forms. To learn in greater detail how to make the most effective use of these indicators for your own trading, see the Technical Analysis for Forex Traders tutorial.

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Cookies cannot be used to identify you personally. To block, delete or manage cookies, please visit aboutcookies. Restricting cookies will prevent you benefiting from some of the functionality of our website. Download our Mobile Apps Currency Converter App Forex Trade App. The field of technical analysis is based on three important assumptions: The price of a security automatically factors in economic conditions.

When it comes to pricing, history tends to repeat itself. Once established, trends tend to continue. There are three self-explanatory trends: Price Chart Patterns Topic 2: Candlestick Formations Topic 3: Fibonacci Retracements Topic 4: Market and Momentum Oscillators Topic 6: Putting It All Together.

Losses can exceed investment.