Fundamentals of Technical Analysis

 

 

 

 

On this page we will now look at the technical analysis and give beginners a first insight into the matter. Most forex brokers offer a lot of training material, webinars and videos that you can practice with directly. MT4 brokers such as FXPRIMUS or GBE brokers allow you to draw directly into the chart using various tools, trend lines, indicators, supports and resistors. In this case, the learning effect is much higher than if one tries to acquire the knowledge only theoretically. So the best way to do this is to open a demo account at a broker and get started! Compared to the fundamental analysis, the technical analysis is the younger form of market analysis and has been enjoying a growing popularity for a short time. It is often referred to as chart analysis and attempts to close the exchange rate development due to the historical development of the exchange rates. To carry out this forecast, the trader needs certain charts of his financial instrument, which he would like to trade. This shows the historical price development in different time units. Many traders achieve high profits with the use of technical analysis. Therefore also the growing popularity of this method. The practical part of the technical analysis: The findings are transferable to any financial market, no matter what products they are. A good Daytrader is at the same time also a good long investor, which is not always the case. The trader makes use of certain brands in the chart where there is a movement. Whether it comes to a long or short movement here, it does not matter in the first place, because it can beat profit from both directions.

 

 

 

 

 

approaches

 

At the heart of this analysis approach, it is assumed that the price of each draw will give all available information on the underlying. The courses from the past thus represent the historical development of supply and demand. The technical analysis therefore does not attempt to find the reasons for the historical price development. It is much more tempting to analyze the opinions and reactions of other market participants. Isn’t that dangerous? However, because what has been applied in the past does not necessarily have to apply to the future as well. Otherwise, each of us would soon be a forex millionaire. In the technical analysis, the trader assumes that the development of exchange rates does not happen randomly, but that certain laws are subject to chart patterns. You can find them and use them for their purposes. Using the charts and/or candle sticks you have access to the course histories in the past. There are three different types of charts:

 

Chart types
Line charts: These represent the historical closing prices in conjunction with a line. The line chart gives you a good overview of the past course history.
Candle stick Charts. Most traders work with them, as each candle gives a lot of information about the course. A candle consists of the candle body, the lower one, called “fuse” and the upper, the “wick”.
Bar charts: Bar charts are mainly used for the so-called analysis of the rod. The horizontal line on the left represents the opening price, which shows the closing price on the right side.
In all time units, MetaTrader can be easily changed between the three chart types. Beginners should try all three versions once, but will soon notice that they feel most comfortable with a version.

 

Line chart
The line chart is based exclusively on the closing prices. Although it provides less information than the candlestick chart, it should always be included in the analysis by trendlines, as many traders and hedge funds only work on the closing price basis.

 

Candle chart
Most traders and hedge funds work with candle charts, because here the trader receives the most information at a glance: The Stills show High and Tiefstpunkte of the period, the candle colour shows us whether the course has fallen or has risen and the closing prices Are visually separated by the candle body. The candle chart analysis comes from Japan.

 

Bar chart
Some traders, especially supporters of the market technology, prefer the analysis with bar charts, because in this case it is possible to recognize good inner rods. For many traders, however, the bars seem rather cluttered, as the small hooks are difficult to spot.

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