Some believe that technical analysis can be used in the both short run and long run, but the vast majority of Forex traders only use it in the short run. Generally, this type of analysis is better suited to those who use more short-term Forex trading strategies, but if you are looking for long-term profits only, it doesn’t mean that you can’t use technical analysis too.
Technical analysis is all about studying price action through various charts and graphs. Most technical traders focus on making shorter-term profits, such as scalpers and swing traders. Forex traders who look for more short-term profits, tend to try and exploit technical analysis more often because it is much more accessible. In fundamental analysis, you have to wait for key economic data and such to be released, but with this kind of analysis, you can simply open up a chart or graph and start looking for trends immediately. Scalpers for example, would look at price charts and graphs for the currency pairs they are trading, with very tight set time frames – some Forex traders even use time frames as tight as a few seconds.
Technical analysis is flexible though; you can still look for long-term opportunities using this type of analysis. For example, you might just set the time frame of your price action charts and graphs for the currency pairs you are trading, to maybe 6 months. By doing this, you will be able to spot longer-term price action trends and patterns. This is one of the most easiest ways you can make money in the Forex market; all you have to do is discover what direction a particular currency pair’s price is trending in and then place an order accordingly. However, ensure that you are aware of short-term price volatility too, when doing this.
In conclusion, technical analysis can actually be used effectively in the both short run and long run. It doesn’t matter what Forex trading strategy you use; you can make use of technical analysis whatever your situation may be. In all fairness, if you are more of long-term Forex trader, you might want to consider focusing on fundamental analysis more. However, this doesn’t mean that you should neglect technical analysis, because it is just as important. Always focus more on what you’re best at and what works better for you, but never trade narrow-minded. If a Forex trader placed an order, basing their investment decision solely on the technical analysis that they conducted beforehand, they would essentially be trading half-blind. Even if you spot a really strong and consistently bearish currency pair price trend on a price chart or graph, it doesn’t necessarily mean that you will be able to make an easy profit from it, because the economy of the base currency could suddenly take a turn for the worse and you could lose everything. It’s important to always keep up-to-date with the news too, if you do choose to focus on technical analysis, regardless of whether you use it to spot long-term or short-term trends and patterns.