What Exactly Is Technical Analysis?

Before you ever make trade, there are certain things that you have to understand in order to make the right decision

. Technical analysis is designed to predict the direction of the market, which shows whether or not to buy or sell. The main focus of it is how price moves, which can be shown in bar charts, candlestick charts, point and figure charts, and many others. Each of these charts has something in common: trendlines, support and resistance, and recognizing chart patterns.

The prices in the Forex market move in trends and this provides the best forex trading positions. This is why it is important to know and understand trendlines. They are quite easy to understand and are essential for your success in trading. They can show whether the prices are moving up or down. It can determine how strong the movement of prices by the length of time it has been at that range and the number of times price approaches a certain trend line.

Support and resistance lines are also very important to know. These are the levels of prices that most technical analysis is based on. These factors are the price levels that buyers and sellers usually respect. There are two levels that prices tend to go up and down from. There is a top-level and a low-level. The top level is called resistance in the lower level is called support.

There are many different patterns to recognize on price charts and can supply you with many forex trading tips. There are support and resistance, reversal patterns and continuation patterns. All of these things have to be recognized and then acted or not act upon depending on your analysis of them. Take the time to learn what each of them means and know what you're charts are doing. You will also need to get samples of charts and practice reading them and recognizing what they are doing. These are the basics of trading.

by: Rhab Hendrik

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