You can analyze the forex market in two ways. They are technical analysis and fundamental analysis. When it comes to forex currency trading, these two ways are very essential to predict the disparities of the currency market and to foretell the price and fluctuation of the market.   Even when there are lot of dissimilarities between technical analysis and fundamental analysis, both these methods are used forecast the price or the movement. This article will help you to understand the basics of Forex technical analysis.

Technical analysis differs from fundamental analysis in a way that the former mainly concentrates on what movements have occurred in the currency market instead of what should have happened. Thus technical analysis is a means to predict the movement of the price and upcoming market trends by evaluating the market trends of the past that had considered the factors affecting the market and the amount of trade that is been carried out.

There are some forex technical analysis tools which helps you to perform effective currency trading. Therefore, before entering the forex market, you should educate yourself about technical analysis tools. These tools are as follows:

• Relative Strength Index (RSI): This is an oscillator which tracks the price. It ranges from 0 to 100.
• The parabolic SAR method: Using this method, you can study the prices and compare them with stop and reversal numbers. These numbers are the indicators for your entry and exist in the currency trading market.
• The stochastic oscillator: This oscillator demonstrates the currencies bought or sold in excess on a scale ranging between 0 and 100%.
• Elliott waves methodology: This method helps you to foretell the price movement of the market by examining the pattern of the waves over a time interval.
• Gaps: Gaps indicates the blank places, especially on the bar chart which means that no trade has been occurred.

Technical analysts make use of charts and tools to figure out the market pattern to foretell future performance. They are pretty confident that the past activities taken place in the market will help to predict the future activities. They do not try to calculate the basic value of the security instead they examine the movement of price and volume and prepare the charts as per the data. Unlike fundamental analyst, a technical analyst, sitting at one place, observes the people entering in the currency market and decides what activity they would perform. On the contrary, a fundamental analyst gets into the market, examines each activity of an individual and decides whether the currencies should be bought or not. According to a technical analyst, each individual who enters the forex market can profit by simply heading in the direction of the market trends.

Overall, forex technical analysis concentrates on the actual market trends wherein the charts are created on the basis of market activities that include price, amount of trade and open interest. It totally concentrates on the time feature instead of features impacting the currency market. In other word, technical analysis examines the effects and not the reasons behind the price and movement of the market.