Testing the Power of Technical Analysis for Forecasting the Market Trend and Future Price in FOREX Market

ABSTRACT: According to the Bank for International Settlements, the preliminary global trading in foreign exchange markets averaged $5.3 trillion per day in April 2013. However, there is always volatility and uncertainty in FOREX market. In accordance with this issue, predicting the future prices and market movements are crucial for traders. In order to understand FOREX market better, the study is assisted by one of the most famous and popular methods which is technical analysis. The aim of this study is to investigate the power of technical analysis for forecasting the market trend and future price in FOREX market. In order to achieve this result, the thesis analyzes the four most trading currency pairs in FOREX market during November of 2013 and utilizes various tools and indicators which are presented by brokerage companies in Meta Trader 4. The study affirms the power of technical analysis in FOREX market. The result shows that 58.33% of entire positions are terminated with profit; 32% in hourly, 15% and 11% in daily and midday respectively. The study has also confirmed that GBP/USD is the most reliable currency pair among the others in the period study was carried out. Keywords: FOREX market, Technical analysis, Indicators. …………………………………………………………………………………………………………………………