Instaforex forex broker market analysis :
What is Technical Analysis?
Technical analysis is a technique to predict future prices based on the past results.
A wide majority of traders uses technical analysis to get the “big picture” of the future based on the previous investments. Even casual traders would like to look at the price charts to see if things are going in their favor or not.
Few assumptions of technical analysis:
• Price’s data is reflected in a majority of the market fundamentals. Some fundamentals like differing opinions and moods are not worth studying.
• In most of the predicted and regular patterns, the history repeats itself. Such patterns that arrived as a result of price fluctuations are known as signals. The main objective of the technical analyst is to show the current market signals by observing the past market signals.
• Price movement in the forex market moves in trends. According to the technical experts, the price movement is not unpredictable or random. Once a trend is on the sideways, up or down, it will continue this way for some time.
Enter and Exit- at the right time
A majority of the traders relies on the volume charts, price charts and other elements that are related to the market data to estimate the best time to enter and exit from the market. Some studies help to describe a trend, while others assist in describing the sustainability and strength of a particular trend over some time.
The best thing a technical analysis can do is to control your emotion and teach you discipline. It may be difficult in the beginning to find out the basic impressions and hold with your exit and entry point as decided. Since no program can assure you of perfection, technical analysis assists you in carrying out your trading plans more effectively.
Types of price charts
Bar charts
This is the most common type of charts that shows the price action. Under this chart, each bar shows a time period. The price time period could be of one minute to several years.
Candlestick charts
The candlestick chart is an extension of bar charts. Instead of displaying simple bar charts, it shows the opening, closing, high, and low price details for a particular time period. As the data progress, better visual effects are displayed.
Figure & point charts
Figure & point chart is identical to bar charts. However, it uses Os and Xs to define the price changes on the chart. The figure & point charts don’t include time scale and price change associated with it.
Types of technical indicator
Strength
The intensity of the market opinion is being described by the strength indicator. It is done by examining the market positions that arrive through various participants of the market. Open interest and the volume are the basic components of the strength indicators.
Support & resistance
Resistance and support shows the levels of price in a situation where rise and fall are continuously taken place in the market. This action takes place as a result of basic demand & supply theory.
