Chart Analysis in Currency Trading

Importance of chart analysis in currency trading:-
Basically, there are two major types of analyzing methods in predicting price or movement of currency in the forex market, i.e. Fundamental analysis and Technical analysis / chart analysis. Fundamental analysis involves the studies of the economic conditions of the country, for example the balance of trade, current account, GDP, unemployment rates and inflation index, government monetary and fiscal policies, interest rates, even social and political forces. Some investors rely on their analyses on these economic indicators, news and announcements to set their trading strategies.
Whilst we must admit that all these financial and non-financial factors are the actual reasons behind most the long term currency fluctuations, in other word is the reasons or causes about the movements, when it comes to short-term day to day trading, the role of technical analysis becomes much more important (and what is actually the reason does not really matter). In technical analysis, traders make forecast of price movements or future market directions by studying various types of charts of past market actions, the purpose of technical analysis is to identify a trend in its early stage so as to trade in the direction of that trend. Technical analysis is a very powerful method of forecasting, as the analyst is not influenced by prevailing market sentiment and he can make a more objective judgment of which way and how far the price is likely to move in the future.
Since forex market is the largest financial market in the world and is also highly leveraged, even minor price movements can have a dramatic effect on your trading performance, so traders need some effective plans and methods to set precise entry and exit points and this is also another very important aspect in technical analysis. By using certain technical indicators (e.g. moving averages or Ichimoku) and calculation techniques (e.g. Fibonacci percentage of retracements and projections) when formulating his/her trading strategies, one can identify more objective levels for setting entry, exit and stop-loss prices, which fundamental analysis is not capable of in providing such levels.
In short, technical analysis is not only an effective method in price-forecasting process helping traders to predict future market directions, it is also an indispensable analysis technique in order to find clear and precise timing and level of entry and exit in day to day trading, therefore, chart analysis or technical analysis
is a very valuable principle in formulating trading strategies.