How to Use Technical Analysis

How to Use Technical Analysis

The basic premise of technical analysis is that market price reflects all available information that may have an impact on the market. As a result, there is no need to look at economic development, fundamental, or new as it already has a limited amount of security. Technical analysts often believe that prices move in trends and that history often repeats itself when it comes to market intelligence. Two major types of technical analysis are chart patterns and technical (mathematical) indicators.

Chart patterns are an independent form of technical analysis where experts try to identify support areas and resistance of the chart by looking at specific patterns. These patterns, based on psychological factors, are designed to predict where prices are headed, following the difference or variation of the price point and time. For example, an ascending triangle chart pattern is a growing chart pattern that indicates the main area of ​​resistance. Skipping from this resistance can lead to significant, high volume movements.

Technical indicators are a form of technical analysis analysis where experts use various mathematical formulas in numbers and volumes. The most common technical indicators are moderate travel, which is smooth price data to help make it easier to identify trends. Complex technical indicators include a moving average convergence divergence (MACD), which looks at interactions between several moving averages. Many trading systems are based on technical indicators as they can be calculated in bulk.