technical analysis

Technical analysis

Hello again,

Welcome to another post on learning forex. We looked at the various forex analysis types. We learnt the three most used analysis types and how each one of them is important to the other. If you don’t know what forex analysis is or what these three chart analysis types are please refer back to the posts TYPES OF FOREX ANALYSIS. Here we outlined the three types so we can begin with the first one to be used technical analysis. Creating actual forex success needs you to practice learn and understand all that is needed in these analysis and sharpen that brain like you would a sword. This means time and dedication.

Technical analysis

This is the study of price movement on the forex charts. This is the framework used by traders to study historical/past price movement so as to understand current and future price movement. The main evidence/point for this type of analysis is that all market information is reflected by the price. So if price is a reflection of all that is out there then all we need to make a trade is price movement to make a good trade.

Like the old saying History repeats itself , this what fuels technical analysis. If a price has had previous support and resistance levels then the traders will look at these previous support or resistance levels to determine price movement(whether the price will go up or down).

This means they look for similar trading patterns as they have been in the past and use that as basis that the price will move as it did in the past in the future. Simple isn’t it. Whenever you use the word technical analysis most traders will look at the charts. This is because charts are the best way to represent and visualize historical data.

You can use this charts to help you look at past data to recognize trends and patterns that will lead to some profitable trading opportunities. Another thing to note, is that as more and more traders use this analysis and react towards the market as such their projections actually cause the market to act as such. Another is that its very subjective, just because some is looking at the same chart and indicators will not automatically mean they will have the same price outcome. So remember this as we start. The key is to understand the concepts in technical analysis so as to create or understand those trade setups.

 

Now we move to FUNDAMENTAL ANALYSIS…

4 Comments

  • Forex Nation

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  • Bart Grieg

    Reply Reply October 6, 2019

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