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Chapter 6, Part II. Technical analysis

Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, Apr 26, 2011.

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  1. Administrator

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    Part II. Technical analysis [​IMG]
    Commander in Pips: Today we will turn to technical analysis in general without any particular things – just discuss what technical analysis is, and what basis does it stand upon.

    Although you’ve previously said that you “heard that technical analysis is a simplest amongst all types of analysis” I do not agree with you. The point is that technical analysis includes so many different subtypes that you can’t even imagine how many kinds there are. And to investigate all of them, to check them in real practice, to use them freely and easily with a high level of efficiency – it’s very difficult. But, you’re right in one thing – each subtype of technical analysis demands less time for understanding and application than, for instance, fundamental analysis. But each subtype is very different from the other ones and the major problem here is to find the type that is will be absolutely suitable for you personally. And that could demand as much time as study fundamental analysis, for example.

    Pipruit: Thanks, Sir. I think that I have to remember that.​

    Commander in Pips: That is a good decision, Son. Now let’s talk about the foundation of technical analysis.

    [​IMG]
    Traders who dedicate themselves to technical analysis most part of time deal with price movements. The major reason for that is that technical analysis suggests that historical price movement allows you to determine potential price action. Here we can extract major basics of technical analysis:

    1. Analyzing the historical price movements and taking into consideration the current trading environment allows determine potential price action. Here is an old phrase that comes to mind - that history has a tendency to repeat itself again and again. In fact all this is about the subject of technical analysis. If price has shown some areas that it couldn’t break for significant period of time to the upside (resistance) or to the downside (support) – traders will surely note that and adjust their trading strategy based on this information. Technical analysis studies not only particular levels, but some historical price movement patterns, and technical traders and analysts believe that these patterns will repeat in the future and price will behave in the same way. Traders create their trading ideas that are based on the concept of repeating of these price patterns.

    Here is an example of aNZD/USD chart – look, how the 0.4857 area has acted since 1998

    [​IMG]
     
    #1 Administrator, Apr 26, 2011
    Lasted edited by : Feb 7, 2016
    TOURADA and fran alvarez like this.
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