Technical analysis acts as the backbone to profiting in the forex market. It is the art and science of analyzing charts, price action, and indicators to determine how prices might move in the future.

Traders use a variety of indicators—moving averages, Fibonacci retracements, and support and resistance to assist them in frame process of determining when to enter or exit trades.

While fundamental analysis looks at news and economic policies, technical analysis relies solely on current facts as expressed in the price. Technical analysis often assumes history repeats itself, which also presumes that the market’s past price behavior will provide some insight on market expectations. While a trader can use technical analysis to look for bullish breakouts or reveal reversal analysis when the recent price alternates downwards, it gives traders the ability to exercise logic versus emotion.

Coupled with good risk management and discipline, it can serve as a powerful weapon for both a scalper or a long-term investor. In forex, technical analysis is not an option, it is the edge, that separates a consistent winner from a hopeful guesser.