Basic analysis is to analyze the basic factors that affect the foreign exchange rate, including the economic development level and situation of various countries, the political situation of the world, regions and countries, market expectations and so on.

Technical analysis refers to the forecasting and analysis method to predict the future trend of exchange rate and determine the entry and exit strategy in speculative foreign exchange market according to the past performance of exchange rate trend with the help of technical analysis tools. It aims at predicting the future trend of market price changes, and analyzes and studies market behavior by means of graphs, charts, forms and indicators of market behavior (price and trading volume in foreign exchange market) by using theories such as mathematics, statistics and price science.

But experienced foreign exchange speculators pay more attention to technical analysis. There is a simple reason. The factors affecting the exchange rate are ever-changing, and it is impossible for anyone to master all the information. Market trends are inclusive and digest everything, so it is enough for traders to study technical graphics, which is also the reason why technical analysis is popular in the foreign exchange market.

What is the theoretical basis of technical analysis?

In the speculative foreign exchange market, regardless of the reasons for the fluctuation of foreign exchange rate, traders will have different reactions to the change of exchange rate, so that the result of the balance of different market forces is that the exchange rate changes follow a certain path. As the international financial market has a long history, it must have its own operating rules. The exchange rate change and its regularity in the foreign exchange speculation market are the basis of technical analysis of foreign exchange speculation. The technical analysis is effective because it is based on the following three facts: the market trend can reflect all information; The price changes are in a trend; History often repeats itself.