Part 10: What is Technical Analysis?

What's Technical Analysis?

* Analy​​​​sis of the Technical

The study is of price movements on a chart of a specific Forex exchange rate or market. It is possible to think of the term technical analysis, or "T.A." in short as being a type of framework used by traders to analyze and utilize the price fluctuations of the market.

The main reason traders make use of T.A. is to predict the future price movements based on the price movements of the past.

The majority of technical researchers believe that every market indicators are reflected in price movements or price movement on a price chart. Therefore, if we think the market's variables all are reflected by price movements, it is logical that we do not require anything else to study and trade in the markets other than price. Technical analysts are my specialty. and, as are other traders in my community. We prefer T.A. since we believe in the concept that every market variable is reflected through price action, and there is no reason why we should use any other method to understand or trade on the market. This isn't to say that having a basic understanding of news and fundamentals isn't beneficial however, we do not heavily rely on them (we have discussed Fundamental Analysis in Part 5).

Analysts of technical analysis look for patterns in the chart which tend to repeat themselves. They use this method to build their trading edge. The fundamental reason behind this is that because the majority of price movements are caused by humans and certain patterns are likely to repeat on the market because humans tend to be repetitive in their emotions and interactions with the market.

Technical analysis is also about studying the market structure, identify patterns, trends, support and levels, and in general learn to read the flow and ebbs of markets. There is definitely discretion with this, and I'll be the first to say that T.A. can be more an artform than an actual science. However, it can be something you become more familiar with and improve as you get better at it and keep practicing. T.A. is my primary trading strategy of price action. It's an off-shoot or derivative of the 'traditional T.A.", except with greater clarity and simple strategies that don't rely on complicated forex indicators or concepts such as Elliot Wave Theory that are extremely complicated and subject to interpretation to me to consider them worth the effort to teach or trade.

Many traders immediately imagine a price chart like the one below whenever they hear "technical analyses". Price charts can provide an incredible amount of information that provides a full overview of the historic and current demand and supply situation and the prices that market participants have considered to be to be the most important. As technical analysts , we must to pay particular attention at these prices because the price is likely to abide by these levels over and over again in fact, a large portion of my course on price action trading is focused on learning to recognize prices and price action configurations from the most important levels of the market. Price charts also reflect of the market's opinions regarding the market and other variables. By making your trading and analysis centered on the price chart of a market, you can simplify your trading process and at simultaneously analyze the end outcome of all that influences the price movements of the market.