Understanding Technical Analysis for Beginners

Technical Analysis

Forex technical analysis is something that is used to provide insights into the way the market is moving, and predict currency changes. Unlike forex fundamentals, which look at current events and use things like interest rates, seasonal changes, holidays, elections and even wars to predict currency movement, technical analysis is based on the idea modeling future movements on past performance.

Forex technical analysis relies on trendlines, and uses the concept of support and resistance levels. It predicts the movements of the markets bas

trend line

ed on the way that the markets have moved in the past – using complex mathematical formulas to predict that the index will be supported (unlikely to fall below) a certain point and that it will encounter resistance (be unlikely to rise above) another point.

Getting started with technical analysis is quite easy since most trading platforms offer a good system for showing the trendlines and bars, as well as applying things like the fibonacci sequence, to your currency graphs. This means that without having to do any complex working yourself you can get a good look at the patterns – the only challenge for you is figuring out how to interpret them.

Even there, many of the trading platforms offer educational materials that will help you to learn what the lines and bars mean, and what you should be paying attention to, as well as how to set your stop losses and your calls so that you can protect your bankroll and maximise your earnings.

Learning forex technical analysis will require some time investment, but it is a much easier proposition in the long term than trading using fundamentals. Experienced traders can glance at a chart and understand what it means then make reasonably informed decisions quite quickly. Trading using fundamentals requires a much more substantial time investment in the long term, and there are far more nuances to understanding how the different countries act together on a social and political level.

If you have the time and experience to do both, then that is quite possibly the best way to trade in the forex markets, but few people do, and that is why signals providers are so popular – they offer a sanity check, and a chance for you to see what experienced traders are doing while you learn how to trade for yourself before (and if) you branch out on your own.

One Response to Understanding Technical Analysis for Beginners

  1. Hyon Knehans says:

    Maintain the helpful work and delivering in the group!|

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