What Is Technical Analysis?
The term technical analysis can be said to be the most accurate price movements study conducted by traders for trading charts with a specific currency pair in Forex or on any other market.
“T.A.” or in full form technical analysis, can be considered as a certain type of structure or framework that is mostly conducted and used by traders for carefully studying and getting promising outcomes of all effects that were for a market’s overall price activity.
There are a lot of reasons due to which traders make use of T.A. with the primary one being to make future predictions regarding price movements after they’ve made decisions on the previous price movement.
According to Technical analysts, all present variables for the market get reflected through price action or price movement on price chart.
So, let’s assume that we consider all variables in the market get reflected through the price movement, it would only be agreeing to the reason that besides price we really don’t require a lot of other market factors.
Having both the fundamental analysis and technical analyst knowledge myself, technical analysis helps you get compliant with the concept that all variables in the market get reflected through price action, so it seems there’s no reason for using any other means for trading and analyzing markets.
By this, I don’t mean that it’s totally bad or unnecessary to get knowledge about news events and fundamentals, but here I’m not really depending heavily on these.
Technical analysts mostly lookout for various patterns while reading the market chart that mostly tends to again repeat. This is done for development of their form in trading edge.
Here, the underlying logic is since most of the changes in price movement are because of certain factors from human beings. A few patterns will be repetitive in nature as all human beings are repetitive in interaction and emotion with market.
Also, technical analysis encompasses studying, analyzing and identifying different structures in market; search for different trends, support different levels of resistance and slowly learn for reading’ the overall market flows and ebbs.
Of course, a little discretion would be involved in this case and here I am also going to let you know that T.A. can be said to be more on the art side compared to science.
With that being said, this is something with which you’ll adapt to easily while gradually being better at a provided practice and time.
Technical analysis also forms back-bone of core trading price action methods, which can be a derivative of traditional T.A.” or derivative.
However, this has a lot of clarity with concise strategies and these don’t generally involve confusion with different indicators of Forex or different things such as Theory by Elliot Wave, one that has been quite open and messy for interpretation for someone like me to easily believe it.
A lot of traders think of price charts such as the above one when people mention words such as “technical analysis”.
Market Price charts can simply offer a great volume of usable data that can be used for a whole picture of your market’s current and historical situations of supply and demand.
This has been important in addition to different price levels that participants in the market deemed as being the most important ones.
While being technical analysts we have to pay special attention on different price levels as price would tend to often respect these. Interestingly, technical analysts can trade as they wish in any of the Forex trade sessions.
Indeed most of the important parts mentioned on this website for price action circles around the best possible and most viable ways for identifying and setting up trading price action plans, while beginning from different market operating key levels.
While a lot of price charts that are presented in the share market index also reflect all available participants in the market, and their set of beliefs, regarding the particular market in addition with market variables, this is also done by laying your focus solely on trading and analysis of market price charts.
In this situation, you’re easily able to streamline all your trading activity and also identify and evaluate the end outcome of all other possible things that contribute to affecting the overall price movement in the market.