What You Should Know About Technical Analysis In Forex

What is technical analysis in forex if it is not art

? A technical analyst must traverse and explore many schools of thought and carefully apply their findings in various weights of importance. They apply their insight to their decisions to buy, sell, and hold. They aspire to predict the movement of the value of a comparison between two specific world currencies, including silver and gold. Although, most technical analysts use an assortment of fundamental indicators in their decisions, their major study, is the chart.

Theirs is a study of a continuing series of a specific set of numbers. The set of numbers is representative of an opening price, a closing price, a period-high price, and a period-low price. There are various perspectives from which to view this set of numbers, however, the most widely used perspective is the candlestick method. The four price levels are used to make a diagram, or candlestick, of the basic price activity of a certain segment of time. These candlesticks occur in similar recurring shapes, which provide signals for the analyst.

When placed in sequence and in relation to a price grid, they form a complex secondary diagram; they become a diagram composed of diagrams. The fluctuations of this two-tier diagram often occur in predictable ways. As they study this arrangement of candlesticks, patterns are sought and recognized.

Patterns can occur in periods that vary in length, continually. Some patterns occur between or near a certain range of prices. These ranges can be rising, falling, or remaining flat in a given period. The highs and lows of the ranges can converge or diverge to form wedges, triangles, flags, and other shapes. All of these shapes and patterns are brought together in the mind of the analyst to form a comprehensive idea of interdependent conditions of several different periods. They consider the history, the present situation, and the future. The future is broken down into near-term, the mid-term, and the long-term periods.

Technical analysis of currency exchange rates takes dedication, a natural love for numbers, and a rich imagination. As well as an unshakable concentration and a deep comprehension of a multitude of factors, it takes knowledge from various professions. This is very similar to the way various forms of art are described and discussed, after all, sheet music looks like a currency chart. What is technical analysis in forex if it is not an art form that would challenge even the genius of Beethoven?

by: Cedric Welsch

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