Sun 2 Apr 2006
Previously we talked about fundamental and technical analysis.
Now let’s look deeply in technical analysis. First rule which most technical analysts stick to is:”All market data alredy represented in the price charts”. They often say that don’t need fundamental analysis because all those factors are already in the market charts.
Is this true or not - you can check yourself and choose best strategy for you.
“Nothing new is on the market”. Indeed, almost all situation are repeating over time. So you can find recognisable patterns in charts. There are lot of famous patterns like “Cleave” or “Bounce”. After some experience you will use them for your profit.
We already mentioned that prices moving in trends. Normally after some financial event occures cross rates are moving in trends. Anfter trend is completely settled you can “enter” and wait until trend is changing. If you successeded - you’ll take your profit.
How to know where to “enter” market and when “exit”? There are lot of technical indicators, like: “moving averages”, “trend lines”, “support level”, “resistance level”, “trading volume”, “volatility” and “momentum indicators”. All those indicators are the base of technical analysis of foreign currency exchange market. We’ll discuss deeply technical indicators later with some examples from real life.