Unlike fundamental analysis technical analysis relies on the use of charts and mathematical techniques to examine various aspects of a currency pair’s price movement. With the growth of the Internet technical indicators which were once available only to brokers and professional traders are now available to any trader with a computer.
Advantages of using technical analysis in forex
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Technical analysis bothers more on charts and trends that give you information on past market movements on currencies; which helps a trader to forecast the future movements of the market. Trading with technical analysis is very important, but combining it with fundamental analysis gives you a better edge in the market.
The purpose of technical analysis is to implement a system of trading, according to your style of trading
Despite of rumours that technical methods lags behind fundamentals, they have different mission particularly assesing current situation and not predict future. But relying solely on some breakout trading or paid indicator is not a good idea, traders should also consider accumulation/distribution and volumes data to get precise view on market current state.
Technical analysis involves the use of indicators that show trending directions of currencies weather it is uptrend or downtrend. Technical analysis can be a viable tool to trade the market but you have to spend time and effort to learn the correct use of the different indicators to achieve a positive result.
Technical analysis uses charts and trends to show the past prize direction of a particular market an in turn help a trader forecast the future direction of the market to buy or sell; this is because of the fact that forex traders have the belief that in the forex market. History always repeats itself; that is a trend or pattern is likely to repeat itself in the near future.
Many forms of Technical Analysis, Book Analysis
..
My view is that we need to be specific. Technical Analysis (TA)
takes many forms from the trivial (SMA) to the much more
interesting.
Price Pattern analysis has a lot of promise, but involves a
bit of intelligence in recognizing tradable patterns.
In Forex, my work for several years has been TA using the
Depth of Market, also known as "The Book" as the basis for
predicting short term trend. Let's call this "Order Flow
Analysis" in Forex which yields "leading indicator"
prediction. Here's why:
My hypothesis is that "Market Makers" or major "Liquidity Providers"
drive the markets. Yes, "fundamentals" dominate long term
price but, in the short term there is a considerable "envelope"
of price movement within which Day Trading occurs. Market
Makers have a plan where they will be moving price, and the
task of Technical Analysis (TA) is to get "clues" as to where
they plan to move, BEFORE the moves take place.
So Trend continuation, as well as Trend Pivot is discoverable by
analyzing "The Book" which falls into the area of "Order Analysis"
or perhaps Order Flow Analysis.
So, if Market Maker drives the market, and we are "doomed" to
follow, then we need to "read the mind" of Market Maker to discover
"before" the moves take place, where MM intends to move the
Price next.
I can show that this is predictive of price movement, which is a
"leading indicator", and that is what traders need to have. I attach
a screenshot showing an example of this prediction of Price movement,
which is based ONLY on analysis of patterns on the Depth of Market.
In the image, this is Raw Price, with Bid/Ask reflected to the right hand
axis. The left hand axis is an "oscillator" Market Bias. When Bias is
elevated, price is predicted to rise. As you can see, it has strong
predictive value, at least 15 minutes before the Rally takes place.
And this is at a Support level, so we are asking ourselves, "will price
break under support, or will it bounce off support." It bounced, and
rallied.
HyperScalper
..
My view is that we need to be specific. Technical Analysis (TA)
takes many forms from the trivial (SMA) to the much more
interesting.
Price Pattern analysis has a lot of promise, but involves a
bit of intelligence in recognizing tradable patterns.
In Forex, my work for several years has been TA using the
Depth of Market, also known as "The Book" as the basis for
predicting short term trend. Let's call this "Order Flow
Analysis" in Forex which yields "leading indicator"
prediction. Here's why:
My hypothesis is that "Market Makers" or major "Liquidity Providers"
drive the markets. Yes, "fundamentals" dominate long term
price but, in the short term there is a considerable "envelope"
of price movement within which Day Trading occurs. Market
Makers have a plan where they will be moving price, and the
task of Technical Analysis (TA) is to get "clues" as to where
they plan to move, BEFORE the moves take place.
So Trend continuation, as well as Trend Pivot is discoverable by
analyzing "The Book" which falls into the area of "Order Analysis"
or perhaps Order Flow Analysis.
So, if Market Maker drives the market, and we are "doomed" to
follow, then we need to "read the mind" of Market Maker to discover
"before" the moves take place, where MM intends to move the
Price next.
I can show that this is predictive of price movement, which is a
"leading indicator", and that is what traders need to have. I attach
a screenshot showing an example of this prediction of Price movement,
which is based ONLY on analysis of patterns on the Depth of Market.
In the image, this is Raw Price, with Bid/Ask reflected to the right hand
axis. The left hand axis is an "oscillator" Market Bias. When Bias is
elevated, price is predicted to rise. As you can see, it has strong
predictive value, at least 15 minutes before the Rally takes place.
And this is at a Support level, so we are asking ourselves, "will price
break under support, or will it bounce off support." It bounced, and
rallied.
HyperScalper
Technical analysis is simple and straightforward, with tools available to every one from the seasoned hedge fund manager, to the novice retail trader. In addition, technical tools are easier to interpret than fundamental indicators, the understanding of which usually requires a period of diligent study. Finally, since technical analysis focuses on the price action exclusively, the technical trader has only one needle in his compass: the price, on which any calculation about profits or losses must be based.
Technical analysis in forex trading is a tools for a trader to use for predicting the movement of a pair. It is related with the past movement of a price but it is important for a trader to see the past price movement and predict the trend.
technical analysis is one of the best trading ways the trades can rely on it for doing his trades more efficiency especially when he can program his own strategies to be run over the terminal or over the server to be running even when the terminal is not running, i do program server scripts using vtl.
With technical analysis we can determine the right time for a transaction ( entry point ) and when it’s time to get out of the market ( point out ) cleary. So we do not waste time for a transaction that is not effective.
Technical analysis have different or varieties of indicators that can predict the price movement of currencies and trend identification. It a great tool that is easy to perform and can be done quickly .You can combine more than one indicator to achieve your goal.
Technical and fundamental analysis trading are both very important factor of Forex trading.If we can trade the base of these two analysis then we can make real earning in Forex.
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