Looking at forex platforms’ dashboards will make you wonder how any person could master and succeed in forex trading. However, with a few fundamental skills and adequate knowledge, anyone can be able to understand the financial markets and technical analysis. Technical analysis, in particular, is a must-know for any trader, and here are some facts to help you understand technical analysis.
What is Technical Analysis?
This is the study and the breaking down of price actions to come up with patterns and get the probability of future events in the market. In a general view, one needs to capture the trend then identify resistance using price charts or time frames.
The only movements that a market can make are upwards, downwards or sideways. On the screen, you will see the price move erratically, thus giving the price action two states: range and trend.
You need technical analysis skills to determine when and where the entire market is moving and use that information to make an exit. In as much as markets appear chaotic, if you use technical analysis you will realize that the price movement is not just random. Although you can never tell a trade is right or wrong before the result, one can use technical analysis to get a viable prediction.
There are many ways to watch different patterns when dealing with technical analysis. Mostly, you will find several traders watching chart patterns, candle patterns and indicators. All three will provide a trader with information used to tell if a move into or outside the market is the best decision.
Technical analysis has been in use since the 17th century by Dutch merchants. Later, Japanese rice traders became accustomed to the same around the 18th century. However, it was not until the 19th century that technical analysis became more conversant to the masses.