How to accomplish a technical analysis with the Forex

Currencies / Forex Trading Dec 05, 2020 - 11:58 AM GMT

In the preceding chapter we explained that to trade correctly with the Forex it is necessary to complete a daily technical analysis of the financial movements in the short and medium term.

This analysis is essential as it will help you to understand and anticipate certain effects and, in this way, consequently to improve your investments whilst keeping a good overall view of the market.

The principle of technical analysis

Far from being reserved for specialists, technical analysis only requires a little attention and concentration and, with the help of simple charts, enables you to assimilate the main movements of the rates on the foreign exchange market. Also, as we will explain in this chapter, the trading platforms make available to you free of charge certain easy to us but high performing tools that you simply have to interpret.

Of course, the information that you can extract from this analysis is not all you should take into account when you start speculating. Other factors, less material, enter into your decisions and you should learn to trust your instincts in order to anticipate the coming market rates.

A technical analysis is however still very interesting as it enables you, through a study of the past trends, to learn and anticipate future trends by understanding the simple rules.

Using this analysis you can therefore limit your risk and focus your choice on the more valuable stakes of your chosen pair.

Although strongly recommended, this technical analysis is not absolutely necessary to trade on the Forex. Your personal experience and intuition can be enough to accomplish successful operations.

Important! To speculate on the oil market and the movements in the price of black gold it is imperative to know how to complete or interpret a technical analysis. For this you must of course be able to read the charts as well as anticipate future movements in the price through understanding which factors influence the rise and fall in the oil rate. Here we offer you the opportunity to learn more about this together with some advice for achieving a pertinent technical analysis on crude oil trading.

What is the point of technical analysis?

Technical analysis serves to help you predict the coming trends on the Forex. By anticipating future movements of the rates you will be able to take a position to sell or buy a given currency pair.

However, the technical analysis will also indicate the volatility of a particular rate. This volatility should be taken into account when choosing the trading tool you will use. When you encounter a strong volatility, strong movements either up or down, it is better to trade the particular currency pair using a binary option in order to benefit from a short term profit. To the contrary, a relatively weak volatility is the sign of a clear trend which offers the security necessary for a more traditional style of trade.

How can I learn to accomplish a good technical analysis?

In order to familiarise yourself with the different analysis techniques we will study all the criteria and information to analyse in order to better understand the financial movements and their explanations. Amongst other things we will look at prices and volume, the different charts, trend lines and other performance indicators such as support and resistance levels and daily and weekly fluctuation channels for the different currencies rates.

All these indicators are necessary for a good understanding of the market and to master risk optimisation.

Once you have completely mastered these different factors of the Forex it will no longer hold any secrets from you and you will be able to trade with complete confidence.

By Andrew Sanchik

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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