Forex technical analysis
Forex technical analysis is one of three main types of analysis traders can perform before they make their investment. In this article, we will show you the basics and explain how to analyze the information you get from the market. Don’t worry; it’s really not very hard, and with our help you’ll be on your way to success in no time at all. You only need to master a few basic terms here and after that you can move on to another article on our website. Let’s get things started, shall we?
Forex technical analysis | Get yourself a chart
First and foremost, to perform forex technical analysis, you will need your chart in front of you. The chart is a representation of how a price fluctuates over time. It basically condenses all market information into a single line and allows you to get a grasp on things quite easily. That’s why it can also help you with your Forex Fundamental Analysis a lot – it shows exactly how an event impacted the price. Essentially, forex technical analysis is all about analyzing this line and trying to find patterns that can help you predict future movements. This is because the price is expected to eventually repeat its behaviour and repeat the pattern. Once you realize that the pattern is forming, you will gain a window in which you can react and place your investment. If you, for example, realize that an asset has not broken a resistance level in a very long time, you will know that the price is very likely to go the other way after reaches that level again.
Forex technical analysis | It’s all a matter of perspective
Don’t let the name of this analysis and the fact that you’re looking for regularities fool you. The main feature of forex technical analysis is that it is subjective. Actually, it’s very subjective. If two traders look at the same chart, they may very well come with different conclusions and observations. If you notice one pattern, another trader may notice something else etc. In this respect there are similarities to Forex Sentiment Analysis. It all depends on what you focus on, how big the time period on your chart is and how far in the future you’re looking. This is actually more like some kind of psychological test where you have say what you see on the screen in front of you. Only it’s not the psychologist who evaluates your answers, but rather your account balance. Still, careful examination of the chart is a must.
Forex technical analysis | Conclusion
Remember, you’re looking for patterns and regularities on your chart – that’s the basic premise of forex technical analysis. At the same time, however, what you come up with depends on your perception and experience. Of course, having additional info is always very helpful because it can narrow your choices down. Just invest your time into examining a price’s past behavior and you’ll be fine. The name of this process sounds much tougher than it actually is. But before you start investing, why don’t you browse around our site a bit more? There is much more to learn.