Forex market is changing, and changing cyclically. It means that usually there are such situations on Forex when the price behaviour becomes as predictable as possible. And if we can predict the price, then we can earn on the market. One question remains: on what basis can we predict the movement of the market？
Here we comes to the technical analysis. Technical analysis is the prediction of price movements based on the analysis of the historical movement of the price chart. The basic principles of technical analysis were published by Charles Dow in a series of articles in The Wall Street Journal, 1900-1902. And although it was based on observations of the stock market, the theory he created works fine on the Forex market. The basic are three postulates:
Market (price) takes into account everything. In the current quotation and market movement, all tendencies, sentiment of participants and other factors that may influence the formation of the current price are already taken into account.
History repeats. Dows observations have shown that market formations, such as the alternation of peaks and lows, are relatively stable and tend to repeat over time.
Price trends are constantly present and complement each other. The price does not move in a random way, and at each moment of time, there is a prevailing movement: up, down or sideways.
Based on this, we can conclude that technical analysis is the universal means for predicting prices in the future.