Basics of Technical Analysis

Basics of Technical Analysis

Technical analysis - a method of forecasting prices exclusively from historical data of the market - price, volume and open interest.

With regard to the Forex market is usually only use the very price history, since the volume of the Forex is available only to users, and open interest is not calculated. Under the Forex tick volume means the number of ticks (changes in quotes) per unit time, ie number of market makers quoting their offers to buy and sell currency in the information system. Tick volume - a very nominal rate, it has little to do with the actual volume, and only indirectly shows the activity of the market.

Most technical analysis methods used is the price, because price data are usually available to the public, and usually arrive in real time.

One of the main concepts in technical analysis is the concept of trend (trend) or the directional movement of prices. The main task of technical analysis - to identify new trends in the price chart in the early stages of development, use them in commerce and in time to exit the market when the trend ends. The main consequence of the situation "prices move sent" is that the current trend is likely to continue and not reverse itself.

The trends are divided into 3 types. >
Bullish trend (bullish) - upward price movement; >
Bearish trend (bearish) - price movement downward; >
Lateral trend (flat) - the price is almost not moving.

As a rule, that all three types of trends in the market did not occur in pure form as a movement, "as the crow flies." Therefore, a rising trend called the trend - in which the move up move down excel and downward - in which the downward movement exceeds the upward motion.

Technical analysis suggests that human psychology is basically unchanged or almost unchanged, at least, the market crowd in similar cases, behaves in a similar scenario, so if any models work (given the opportunity to make a profit) before, then there is every reason to believe that in future they will work.

Technical analysis is a means of statistical evaluation of the mass of human psychology, based on historical data. It is believed that technical analysis techniques should work equally on all kinds of financial markets.

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