What is Technical Analysis? - Technical Analysis Course

Technical Analysis Strategies - Learn Technical Analysis Trading Tutorial Course

To learn how to analyze forex charts, beginner traders will need to learn about the various technical analysis methods used in forex.

Technical Analysis is the science and art of forecasting future forex price movement based on historical prices combined with technical indicators. Learn Technical Analysis Tutorial Course - This Technical Analysis study often interprets the price data by studying a chart & looks for forex patterns & signals for buying & selling.

The history and origin of this Technical Analysis technique dates back several hundred years to Japanese & Arabian markets, Technical Analysis involves using math manipulation of price data to optimize buy & sell points. The use of this type of Technical Analysis in modern computerized programs has become increasingly popular.

The information which the is studied and assessed in forex technical analysis is forex price movement so as to plan an entry or exit into a forex trade. The goal is to determine how the market is trending.

What Does It Really Measure? - Technical Analysis

This Technical Analysis - studies the supply and demand of a forex currency pair in an attempt to determine in what direction the price will continue to move in.

While forex technical analysis deals with forex price and indicators it is just a measure of investor sentiment.

What to Look For in Trading Technical Analysis

Find the Forex Trend

The motto of technical analysis is: "the trend is your friend." Finding the prevailing trend will help you become aware of the overall direction and offer you better forex trading opportunities - especially when shorter-term market movements give conflicting forex signals.

Daily forex charts are more ideally suited for identifying long-term forex trends. Once you've found the overall forex trend direction then you generally open buy or sell forex orders in that direction.

Forex Trend or Range

No matter what forex price is doing, it usually falls into one of these 2 categories. If the price is heading in a pattern setup or in one direction, you can use forex trend lines to analyze where the price should go. If the market seems to be bouncing back and forth in a range, you can use support and resistance lines to make note of where to open buy or sell forex orders.

One of the greatest goals of Technical Analysis studies & techniques in the market is to determine whether a given instrument will trend in a certain direction, or if market will move sideways and remain range-bound. The most common Technical Analysis method to determine this is to draw trend lines which are used by investors and traders to determine whether or not the current trend direction of the market will continue. Many investors and traders avoid trading in a range-bound market & only buy or sell currencies when there is a forex trend since this makes trading more predictable.

For forex technical analysts the most important forex tool is the chart. The purpose of a forex chart is to provide a visual representation of currency exchange rates quotes (plotted on the y-axis) against time (plotted on the x-axis) for a given forex currency pair, this forex chart is used as a basis for making predictions of the future forex price direction.

Forex Trendlines

The direction of these trend lines determines the market trend direction. A trend line drawn moving upward represents a bullish forex market trend and a forex trend line drawn moving downward represents a bearish forex market trend.

Support and Resistance - Technical Analysis

Support and resistance areas are points on a forex chart that tend to act as boundaries. A support zone is usually the trough or low point on a forex chart whereas a resistance area is the high or the peak point on a forex chart. These support and resistance levels are used by traders as buy/sell points.

MAs - Technical Analysis

Moving averages indicator are used to show the average price of a forex currency pair over a given period of time. Moving Averages indicators are called moving because they reflect the latest average in the movement of the prices.

Trading Strategies

To be a successful forex trader you need to create a strategy that works. There is not one set Forex strategy that is good for all forex traders. But Rather, each forex trader needs to develop their own forex strategy.

Technical Analysis is the most widely used strategy in the market and is used to decide the entry and exit points.

market movements have identifiable repeating price patterns that have been studied over many years providing a thorough understanding of these forex market trends and how they can be used to form the basis of a good trading forex strategy.

There are many Technical Analysis tools available provided to facilitate this study

The beginner forex trader is advised to study each Technical Analysis tool separately to get working knowledge of the concepts and application for each Technical Analysis study. Once you understand one Technical Analysis method, keep on using it while studying others. Each Technical Analysis tool tends to combine well when used with other Technical Analysis Tools.

Support & resistance levels are also used in many Forex strategies. Support is defined as the level that is repeatedly seen as the bottom (floor) - when the price reaches this level it tends to bounce. Resistance level is the ceiling, the upper boundary (ceiling) that a forex currency pair rarely trades above.

Support and resistance levels are valid for a period of time, until they are broken, When the market breaks through these support and resistance levels, the price is expected to continue in that direction. For example, if the market rises above the previous resistance level, it is seen as a bullish forex signal and the bullish movement should continue upwards.

Longer forex chart time frames establish more stronger support and resistance levels. traders can use these support and resistance levels to determine when to enter a trade or exit an open position.

Moving averages is another common technical indicator used as to create trading strategies. Moving averages try to smooth out short term forex market price fluctuations giving a clearer picture of the currency movements and trends. Traders can draw SMA to determine currency movement tendency to move up or down - trend.

If price crosses above the simple moving average then it will keep on moving up.

If price crosses below the SMA then it will keep moving down

These are examples of strategies that can be used individually or combined.

Traders use two or more Technical Analysis studies and to determine when to open a forex trade order when both Technical Analysis indicators support the same direction. If several Technical Analysis indicators show that the market is moving towards a particular direction the a trader can trade with more reassurance than when one is only relying on one Technical Analysis indicator.

Fundamental analysis should also be used together to reinforce Technical Analysis findings, or vice versa. A trader should ideally take into account two or more Technical Analysis indicators when developing a Strategy.

Every trading strategy should provide clear guidelines about when to enter and exit a buy or sell trade position, how much loss can be accepted if the market moves in the other direction and how much profit is expected. Following these simple Technical Analysis guidelines can help you become successful in forex.