ForexEzy
No Result
View All Result
  • Home
  • Getting Started with Forex
  • Forex Education
    • Forex Basics
    • Forex Trading Strategies
    • Money Management
    • Risk Management
    • Technical Analysis
    • Fundamental Analysis
    • Trading Psychology
    • Social Trading
    • Automated Trading
  • Forex Tools
    • Forex Robots
    • Forex Indicators
    • Forex Signals
  • Top Forex Brokers
  • Top Forex Robots
  • Commentary
  • Blog
  • Home
  • Getting Started with Forex
  • Forex Education
    • Forex Basics
    • Forex Trading Strategies
    • Money Management
    • Risk Management
    • Technical Analysis
    • Fundamental Analysis
    • Trading Psychology
    • Social Trading
    • Automated Trading
  • Forex Tools
    • Forex Robots
    • Forex Indicators
    • Forex Signals
  • Top Forex Brokers
  • Top Forex Robots
  • Commentary
  • Blog
No Result
View All Result
ForexEzy
No Result
View All Result
Home Forex Education Technical Analysis

What is Technical Analysis for Forex Trading ?

by Tim Baudin
September 2, 2016
in Technical Analysis
0
What is Technical Analysis for Forex Trading ?
0
SHARES
11
VIEWS
Share on FacebookShare on Twitter

Technical analysis is a method to analyze the future possible direction of price movement of currency pairs or securities or other financial assets by using past market data, primary price, and volume.

Technical analysts use charts, indicators, and other drawing tools to understand the future possible price movements and its direction.

https://youtu.be/MzHRoOC4ec4

Technical analysis has become very popular for the short term, midterm and long term trading. Like other financial markets, technical analysis is widely used in the forex market. Technical analysts develop trading rules and trading systems by using various indicators, theories and charting tools to analyze the currency pairs in the forex market.

Technical analysts focus on price actions rather than the fundamental condition of the currency pair. However, technical analysis can be combined with fundamental analysis to obtain a better result.

Basic Assumptions of Technical Analysis:

There are some basic assumptions of technical analysis. These are,

Price discounts everything:

Technical analysts believe that all the relevant information is already reflected in the price. This is why technical analysts tend to understand mass traders’ sentiment on this relevant information which has already reflected in the price of that asset or currency.

Price moves in trends:

Technical analysts believe that price moves in trend. A trend can be an uptrend, downtrend or flat. An uptrend means an upward direction of price in a long timeframe. Inversely, a downtrend reflects a long-term downward movement of price.

The trend is considered as flat or ranging when the market is stuck in a range and not moving in any specific direction. In this case,  it is considered that there is no trend. Here is an example chart of trends (uptrend, downtrend and flat) in the daily chart of EUR/USD (given below).

An uptrend can be identified by drawing an upward trend line by joining the higher low points. A downtrend can be identified by finding lower high points or by drawing a downward trend line by joining the lower high points. When the price lies between a horizontal support and resistance lines, then it is considered as a flat trend.

History tends to repeat itself:

This is another basic assumption of technical analysis. Technical analysts believe that history tends to repeat itself in the present and future price movements. This repetition may not be done in exact price or exact time. Usually, history repeats itself in forms of chart patterns or situation.

These chart patterns and the situation can be found in past, present and future. Some patterns and situations are bullish in nature and responsible for positive price movements. Some chart patterns are bearish in nature and responsible for negative price movements.

Summary:

Technical analysis is not an exact science. So, you cannot win every time you trade with technical analysis, but most of the trades will be winners as technical analysis increases the winning probability. There are different styles and trading methods in technical analysis and traders should choose among these according to their trading personality.

Money management and trading psychology play a vital role in trading success. Using technical analysis without discipline and proper money management will lead you to the losing side in the long run.

ShareTweet
Previous Post

FOMC & BOJ Update

Next Post

Fundamental Analysis vs Technical Analysis

Related Posts

An Introduction To Forex Momentum Indicators

An Introduction To Forex Momentum Indicators

by Tim Baudin
January 19, 2021
0

Overview There is a recurring belief in trading communities that price lies, but momentum doesn’t. The forex market is somewhat...

An Introduction To Forex Indicators

An Introduction To Forex Indicators

by Chintan Patel
January 1, 2021
0

What are the Forex indicators? A vast part of technical analysis is understanding and trading with these tools. Although they...

Using Trendlines and Saucer Formations in Trading

Using Trendlines and Saucer Formations in Trading

by Tim Baudin
December 21, 2020
0

Trendlines are those lines that you can recognize easily. A trader draws trendlines on charts in order to connect a...

RSI - Top 3 Real Charts You've Missed

RSI – Top 3 Real Charts You’ve Missed

by Tim Baudin
December 17, 2020
0

Overview Are you still doubting the power of the RSI? This article will cover three recent forex trading opportunities mostly...

The Trading Indicator You Have not Heard of – The Williams %R

The Trading Indicator You Have not Heard of – The Williams %R

by Adam Stanley
December 1, 2020
0

The Williams Percentage Range is a highly effective tool that measures price variations over a period of time for various...

Load More

Best Forex EA

  • ROFX 9/10
  • Forex Fury 8/10
  • FXgoodway 7.5/10
  • Z Trader FX EA 7/10
  • Forex Incontrol Reborn 6.5/10

Popular News

  • The Best RSI and CCI Combination Trading Strategy for Optimum Returns

    The Best RSI and CCI Combination Trading Strategy for Optimum Returns

    2 shares
    Share 2 Tweet 0
  • Rofx Review – High Profitability and Stable Performance Analysis

    29 shares
    Share 29 Tweet 0
  • The Best Forex Scalping Strategy – Using 3 Popular Technical Indicators

    0 shares
    Share 0 Tweet 0
  • The Best MT4 Indicators & Expert Advisors For Forex Trading

    2 shares
    Share 2 Tweet 0
  • How to check if the indicator is repainting?

    2 shares
    Share 2 Tweet 0

Trading

Footer

We are dedicated to demystify the world of forex trading for you – no matter what level you are on.

Categories
  • Automated Trading
  • Day Trading
  • Forex Basics
  • Forex Brokers
  • Forex Education
  • Forex Forecasts
  • Forex Indicators
  • Forex Market Commentary
  • Forex Robots
  • Forex Signals
  • Forex Tools
  • Forex Trading Strategies
  • Fundamental Analysis
  • Money Management
  • News
  • Risk Management
  • Social Trading
  • Technical Analysis
  • Top World Traders
  • Trading Psychology
  • Uncategorized
Tags
arbitrage atr bollinger bands cci chart patterns classics copy trading courses day trading forex brokers forex charts forex ea forex education forex forecasting Forex Indicators forex software reviews grid trading hedging ichimoku macd market cycles news trading oscillators price action trading rsi social trading strategies tips & tricks trading bots trading platforms trend trading Video
  • Terms of Use
  • Privacy Policy
  • Compensation Disclosure
  • Risk Disclosure
  • About Us
  • Contact Us

Copyright © 2020 by ForexEzy.com

No Result
View All Result
  • Home
  • Getting Started with Forex
  • Forex Education
    • Forex Basics
    • Forex Trading Strategies
    • Money Management
    • Risk Management
    • Technical Analysis
    • Fundamental Analysis
    • Trading Psychology
    • Social Trading
    • Automated Trading
  • Forex Tools
    • Forex Robots
    • Forex Indicators
    • Forex Signals
  • Top Forex Brokers
  • Top Forex Robots
  • Commentary
  • Blog

© 2020, Forexezy.