Technical Analysis (technical analysis) is one approach or method of analysis that evaluates movement of a stock price, foreign exchange, futures contracts (futures contract), the index and some other financial instruments. The technicians will conduct fundamental research on price movement patterns are repeated and predictable. Even technical analysis can also be interpreted as a major study on price, including the amount (volume) and an open position (open interest).
So in essence, technical analysis is an analysis of the pattern of price movements in the past in order to forecast price movements in the future. Technical analysis is often also referred to by chartist as the analysis conducted a study using a graph (chart), where they hope to find a pattern of price movements so that they can exploit for profit.
In technical analysis, to predict forex price movement and stock index the same as predicting the movements of commodity prices as analysts see only the factor graph and volume of transactions only.
BASIC PRINCIPLES Technical Analysis There are three principles that are used as the basis to perform technical analysis, namely:
1. Market Price Discounts Everything Ie all events that can lead to volatility in the forex market as a whole or the price of a country's currency as economic factors, political fundamentals and also includes events that are not predictable as there is war, earthquakes and so forth will be reflected in the price market.
2. Moves in Price Trend That is the price of foreign exchange will remain engaged in a trend. Prices began to move in one direction, down or up. This trend will be sustained until the price movements slow down and give warning before turning and moving in the opposite direction.
3. History repeats It Self Because of technical analysis also illustrates the psychological factors of market participants, the movement can be made by reference to historical price movements to predict the future. This historical pattern can be seen from time to time in the charts. These patterns have a meaning that can be interpreted to predict price movements.
Some of the indicators used in Technical Analysis Support & Resistance Is the level of resistance between the bullish price move (uptrend) and bearish (downtrend). Bullish pushing prices up, and bearish down. Bookmarks prices basically move shows how far the price moves up or down.
Support and Resistance Levels Support is a price resistance level was below the current market price, where buying interest should be able to master and maintain the sales pressure from falling prices.
Resistance is a price above a resistance level that the current market price, which selling pressure should be strong enough to control the pressure to purchase and maintain tdak too high.
When investors expect a change, they often do with a sudden. Note: The breakout above the resistance level is accompanied by a significant increase in that volume.
The development of support and resistance levels is probably the most significant events and measured in the chart price. Penetration level of support / resistance can be triggered by fundamental changes above or below investor expectations (for example: changes in income, management, competition etc..) Or by a self-fullfilling Prophecy (investors make purchases when prices rise). The cause is not new Expectations sesignifikan like effect that leads to new price levels
Supply and demand There's nothing mysterious about support and resistance: a classic supply and demand. Supply lines indicate quantity (such as: the number of shares) where the seller will take action on a given price. When prices rise, quantity sellers also increased at that time so many investors want to sell at the highest price. Demand lines show the number of shares which the buyer wants to buy at a given price. When prices go up, quantity down when buyers were so few investors are willing to buy at high prices
At a given price, charts supply / demand indicates how much buyers and sellers. In the open market, this line regularly changing. Investors expectations may change and also the prices shown between buyers and sellers make sense. Breakout above the resistance level is evidence of upward shift in the demand where more buyers want to buy at high prices. Same with the failure of support level indicates that the supply line has changed Downward
Foundation of technical devices analysts based on the concept of supply / demand. Chart prices for financial instruments give us the vision that is more of this activity.
Traders' Remorse Following the penetration level of support / resistance, is very common for traders to question the new price level. For example, after a breakout above the resistance level, buyers and sellers can question the validity of the new price and decided to sell. This creates a phenomenon called "traders Remorse" where prices return to levels of support / resistance following the breakout price.
Price action since Remorse is a crucial period. One of two things can happen. Is it the consensus of expectations which the new price can not be guaranteed, in this case prices will move back to previous levels; or investors will accept the new price, in this case the prices will continue to move the direction of penetration. If you follow the trader's Remorse, the consensus expectations of recent higher prices are not guaranteed, "bull trap" (or false breakout) created a classic.
The same sentiment created the bear trap. Prices fall below levels that support very long downtrend reduced (or sell short) and then bounce back above the level of support left the downtrend.
The best way to quantify expectations following a breakout is to associate the volume with a price breakout. If prices penetrate the high level support / resistance with large increases in volume and period traders' remors relatively low volume, this suggests a new expectation will occur (the minority investors would be wrong to act).
Conversely, if the breakout on moderate volume and periods of "remorseful" is in the level of improvement, this shows very little to change investor expectations and return to its original expectations. Resistance becomes support. When the resistance level is successfully penetrated, level changes to the level of support.
Support Becomes Resistance One of two things will happen when prices approach the level of financial instrument / support / resistance. On the one hand, it can react as a reversal point. In other words, when stock prices fall to a level of support, the price will go up again. While on the other hand the level of support / resistance will be moved behind the time of penetration.
For example, when market prices fall below the level of support, the previous support level would be a resistance level while the market and then return to previous levels
Trend Lines The concept of trend is very essential to the technical approach to market analysis. All of the devices used by the chartist-level support and resistance, price patterns, moving averages and trend lines and so forth-has the basic purpose in helping to gauge market trends for the purpose of participating in the trend.
Trend Lines: uptrend and downtrend
HAVE A third trend DIRECTION Most people always think the market is always on the uptrend or downtrend. The fact is the market moving in three directions: up, down, and flats. This distinction is very important to be known at least at the third, moving prices flat or flat. This flat type reflects the balance of the period in which the price level of demand and supply forces in relatively stable condition. This trend defines a sideways movement (sideways trend) as a trendless market.
This type of change selalunya not constant, based on the news and rumors. Changes like this would create a trap on bullish or bearish market.
There are three decisions in the face of a trader - whether going long (buy), short (sell) or did not do anything on the market. When the market rises, the strategy is highly recommended purchase. When falling, the second approach is very appropriate. However, when the market moves laterally, the third option-out of the market-usually a wise decision.
You can see the charts, with the changing days, or weeks as the time frame, chartist should decide the direction and duration of the trend. Formed from various types of market trends, and the introduction of this trend will largely determine the success or whether long-term investment / short.
Moving Averages Moving Averages is one of the technical indicators are the most versatile and commonly used, because of how the formation and the fact that it is very easy to calculate and at trial. Moving Averages are the basis for many trends mechanical systems. Basically follow the market trend, because it only tells us the trend which occurred after the fact.
Moving Average, MA To find out the movement during the 50 days on the closing price, the price for 50 days or more and total canopy added divided by 50. The term moving / moving used because only the price during the 50 days used in the calculation, for it was the body of the averaged data on the average moving forward every day a new trade.
Note, the moving average can not be calculated before the data has a period of "n". For example, we can not show the average movement over the 50 days prior to 50 days from the charts.
Moving Averages The most common is the average day of 20,30,50,100 and 200. Each Moving Average provides a different interpretation of what would be the price instrument. Not always there is only one time frame. Moving Averages with a time span different telling a different story. The shorter time span, the more sensitive Averege Moving to price changes. The longer the time span, a little more sensitive or gentle Moving Average. Moving Averages are used to confirm the direction of the trend and the softness of the price and volume fluctuations or "noise" that can confuse interpretation.
Some types of moving averages in the chart: * Simple Moving Average (SMA) * Exponential Moving Average (EMA) * Smoothed Moving Average (SMMA) * Linear Weighted Moving Average (LWMA)