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Forex Charts an Introduction
When you use forex charts you are engaging in technical
analysis of forex prices so what is technical analysis? It is simply
defined as the study of price action through the use of charts - for the
purpose of identifying price trends. Forex technical analysis is based
upon the following simple equation:
Market Perception (trader perception) + Fundamentals (supply and demand)
= Price Movement
Forex technical analysis simply assumes that all known fundamentals are quickly reflected in price action (and today with instant communications available to all traders this is truer than ever before) forex technical analysis and the study of forex charts is not interested in studying what the fundamentals are but their effect on price.
The Price action simply gives the forex chart user the whole picture – it not only reflects all the fundamentals, but more importantly, how all the participants perceive them.
The Importance of Human Nature
In any market it is humans that determine the price of
anything. We all have the same facts at our disposal but we all see
them differently and it is our perception and that of millions of other
traders which determines price.
As humans we tend to push prices to far up or down as we are succumb to the emotions of greed and fear, the importance of human nature as the critical factor in price direction is there for all to see.
For example, some of the largest price moves in history have taken place with little or no change in the fundamentals. It’s a fact that markets are most bullish at market tops and most bearish at market bottoms. This is human psychology was at work.

