Technical analysis is a tool, or method, used to predict the probable future price movement of a security – such as a stock or currency pair – based on market data.
The theory behind the validity of technical analysis is the notion that the collective actions – buying and selling – of all the participants in the market accurately reflect all relevant information pertaining to a traded security, and therefore, continually assign a fair market value to the security.
How Do We Know Technical Analysis Works in Forex?
The topic has been the subject of much research through the years. And those studies reached different conclusions. But, most seem to come down in favor of the conclusion that technical analysis does work in forex.
While we’ve said above that technical analysis does work in forex, there are caveats.
For example, its effectiveness might depend on the currency you trade. Further, the technical tools you use and how you use them will also influence results.
Advantages of Technical Analysis:
1. Forex technical analysis only requires a few basic tools which are free with the Admiral Markets MetaTrader platform.
2. Forex technical analysis can sometimes give high probability directional views and points of entry and exit from the market.
3. There are a wide variety of technical analysis tools and indicators that can help with identifying possible trading setups.
Technical Indicators – Moving Averages.
In addition to studying candlestick formations, technical traders can draw from a virtually endless supply of technical indicators to assist them in making trading decisions.
Technical Indicators – Pivots and Fibonacci Numbers
Daily pivot point indicators, which usually also identify several support and resistance levels in addition to the pivot point, are used by many traders to identify price levels for entering or closing out trades. Pivot point levels often mark significant support or resistance levels or the levels where trading is contained within a range.
https://www.forum.forex
The theory behind the validity of technical analysis is the notion that the collective actions – buying and selling – of all the participants in the market accurately reflect all relevant information pertaining to a traded security, and therefore, continually assign a fair market value to the security.
How Do We Know Technical Analysis Works in Forex?
The topic has been the subject of much research through the years. And those studies reached different conclusions. But, most seem to come down in favor of the conclusion that technical analysis does work in forex.
While we’ve said above that technical analysis does work in forex, there are caveats.
For example, its effectiveness might depend on the currency you trade. Further, the technical tools you use and how you use them will also influence results.
Advantages of Technical Analysis:
1. Forex technical analysis only requires a few basic tools which are free with the Admiral Markets MetaTrader platform.
2. Forex technical analysis can sometimes give high probability directional views and points of entry and exit from the market.
3. There are a wide variety of technical analysis tools and indicators that can help with identifying possible trading setups.
Technical Indicators – Moving Averages.
In addition to studying candlestick formations, technical traders can draw from a virtually endless supply of technical indicators to assist them in making trading decisions.
Technical Indicators – Pivots and Fibonacci Numbers
Daily pivot point indicators, which usually also identify several support and resistance levels in addition to the pivot point, are used by many traders to identify price levels for entering or closing out trades. Pivot point levels often mark significant support or resistance levels or the levels where trading is contained within a range.
https://www.forum.forex
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