Technical analysis in Forex Trading

By TechGuy - November 29, 2017


Technical analysis is the study of historical price movements by using charts in order to predict future price movements. Charts, and all the various technical analysis indicators that can be applied to them, are essential tools for traders. In its most basic form, technical analysis helps you to identify entry and exit points for your trading.Charts are a major tool in Forex trading. A Forex chart is a graph representing the movement of market prices during a specific time period. There are many kinds of charts, each of which helps to visually analyze market conditions, identify behavioral patterns, and assess and create forecasts. When traders perform technical analysis, they usually overlay lines on a chart and apply technical indicators to reach conclusions about future price action.

Types of Charts:

Three of the most popular chart types are bar, candlestick and line charts. At easy-forex, you can view all three types, and choose the one that best suits your trading strategy. Aside from choosing a chart type, when looking at a chart traders also need to select which timeframe they want to analyze. A chart is usually composed of many points or bars or candlesticks, each representing a period of time. In a 30 minute timeframe, the individual point or bar or candlestick shows what happened to the price by plotting the opening, closing, high and/or low price of each 30 minute interval. Timeframes can be chosen and changed by traders, and we’ll look at them in more detail later. Let's take a closer look at each of the different chart types a trader can follow and the benefits of each choice.

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4 comments

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