Let's start with the assumptions underlying technical analysis . In this case I would take an extreme approach so that you can understand how a technical analysis used in obtaining gains in forex trading. Of course in practice it was not so. You can combine both analysis (fundamental and technical) in order to obtain the best trading system for you.
The chartist (those who commit technical analysis), believe that they can know the pattern of price movements of the exchange rate in the future on the basis of observations in the past exchange rate movements. In short they hold this jargon: "History always repeats it self." Philosophy is of course contrary to the fundamentalists where investment decisions on the value of a currency is based on fundamental economic factors, political and monetary country concerned.
The main weapon is a technical analyst graphics (charts - that's why they are called chartist). Through this chart they can see trends that are taking place, time frames trends, transaction volume and level-existing psychological level. If you were able to know 4 things, the big advantage of course would soon flowed freely into your pocket. Let me repeat that:
1. Trend
2. Transaction volume
3. Level-psychological level (support and resistance)
4. Time period occurring.
Yup, that's it. It is the objective of the chartist is predicted to four this case. But now the question is how accurately be our ability to predict the price? Well that's what it should continue in the grind every day. None of perfectly good method fundamental or technical. Experience and self central role here. Is technical analysis has weaknesses?? Of course. Like I said you tried, nothing is perfect. Let me sarikan second weakness of this analysis in table form:
Well that's it for the introduction on technical analysis. In the next section we are only acquainted with the graphics directly. You definitely do not want too much information that eventually not even make you dizzy?
Weaknesses in Analysis
Fundamental Weakness in Technical Analysis
It takes time to acquire information. Requires a lot of data to support predictive akuratnya.
Because nature often involves a lot of subjective opinion.
More suitable applied to long
term trading period.
Difficult to apply in an inefficient market.
Highly dependent on the ability chartist. Each chartist have different methods and each applied not necessarily match each other.
Tips
market price is determined by the attitude of the traders who transact in it. This means that the market (price trends) mobilized by tradernya psychology (greed, fear, hope, despair, etc.). Al Goldman, a market strategist says "Ninety percent of the market is the mood and ten percent Fundamentals." Well, Technical Analysis learn the psychology of the market is illustrated graphic form. Because human nature does not change, then the pattern depicted in the chart repeated. (History Repeats Itself), each market also have the nature / character of its own.