Technical Analysis

Technical analysis market is a type of Forex analysis technique that heavily relies on numbers and historical data. It makes use of charts, quotes, indicators (both simple and complex), supply and demand volume, and most especially, the data about past market performance. Its main purpose is to give traders a clue on what will happen in the market based on all the data that was gathered from the past. 


 Many trading platforms offer online users or traders of different types of technical analysis. Using technical analysis tools, you can have a better projection of the ups and downs of the market. With the knowledge you get from this type of analysis, you will be able to make more effective business decisions and minimize the risk of trading on the Forex market. However, you must remember that even the most profitable traders do not stick with technical analysis alone. Technical factors are often weighed vis-à-vis the fundamentals. Make sure you consider other techniques such as fundamental analysis to better reading of the market.

Technical analysis trading market involves different types. Some of the most popular types of technical analysis tools are mapping, volume indicators, Bollinger Bands, Relative Strength Index and Stochastic. Each of these types has unique methods to generate data. They also help you explore technical factors from different perspectives.

Here are brief explanations of these types:


The most basic type of Forex technical analysis is the "trace". Basically, it focuses on knowledge and analysis of high, low and closing prices in a certain period of time on the market. The use of this type of technical analysis, you will know immediately the major trends in the market areas of support and resistance trends in price changes.


On the other hand, the volume indicators focus more on traders say the volume of transactions, and to come to them to know if there will be a sudden increase or fall, or roll over. Many rely on this analysis as their leading indicator to predict future price trends.

If an operator wants to check the volatility of market trends, it will be based on Bollinger Bands. The technique collects data on prices moving average of 21 days. If you use this technique, always look out for any sharp tightening bands. When you see that, it means that market volatility will increase intensely, and a new price trend may occur.


Last but not least is the RSI (Relative Strength Index). This type of analysis is used when traders want to predict future market reversals. Basically, the RSI is a scale from zero starts and ends with 100. If an operator sees a value that is less than 20 above, it is possible that an uptrend will happen. Alternatively, if he sees a value that is greater than 80, a downward trend can arrive at the place.


As you can see, the Forex technical analysis is an effective tool that you can use in your business. Use it wisely other Forex tools, and you can expect that your success rate when your transaction will significantly increase.