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Technical analysis is an essential tool for determining the positions of opening and closing. Forex has a strong, clear trends of changes in prices, where the technical analysis can be used. This means that with its help can be quite likely find the changes of the trend.


In addition, due to the specifics of currencies, the investor opens and closes positions many times during the day. Playing at such short lengths of time, technical analysis seems to be practically the only effective tool that allows to obtain a good results.


Remember anyway that the rules of technical analysis are not infallible laws of science. Technical analysis is more art than science. On the other hand, technical analysis, however, is based on many years experience in all financial and capital markets. Certainly its use can achieve much higher average return than investing only based on intuition.


In practice, the biggest problem is not the failure of technical analysis, but the lack of consequence and disregard of signals flowing from it by investors. Ignoring the basic principles of technical analysis is the most exposure to loss or at best to reduced profits.


Technical analysts use data from the past. Rate of turnover and volume are only necessary information. These data is regarded as the full information, which means that technical analysis is the internal assumption that everything what has an impact on the market is reflected in rates and volume.


The level of quotation and sales responds to any response of investors, including psychological, that particularly in the short horizon of investment are important. Therefore, the superiority of technical analysis over fundamental manifests mainly in the short term.


Basic principles of the technical analysis can also include three statements:
- Rate movements are a consequence of fluctuations in supply and demand on the market,
- It is possible to determine the direction of the change (trend), which always takes a long time,
- Fluctuations in the price level are arranged in a certain, repeated and a regular cycle.


On the Forex market, the chart is a visualization of the market situation of the currency. On any trading platform you can find a service dedicated to the graphs, so it is possible towatch the current market situation and react appropriately.