When it comes to forex, analysis is the most critical aspect of effective trading. Forex analysis is basically divided into three types including technical analysis, fundamental analysis, and sentimental analysis. Technical analysis is the framework in which traders study price movement. This type of analysis can help traders determine not only when and where to enter a market, but also when and where to get out. It is basically, more about probability of the market fluctuations.
In this session, the discussion is about technical analysis and the way it can be adopted in forex trading sessions for traders. The actual theory behind technical analysis is that a person can look at historical price movements and determine the current trading conditions and potential price movement.
Traders who use technical analysis are known as technical traders. The main evidence for using technical analysis is that, theoretically, all current market information is reflected in the price. If price reflects all the information that is out there, then price action is all one would really need to make a trade. Technical analysis looks at the rhythm, flow, and trends in price action.
That’s basically what technical analysis is all about!
If a certain price held as a major support or resistance level in the past, forex traders will keep an eye out for it and base their trades around that historical price level. Technical analysts look for similar patterns that have formed in the past and will form trade ideas believing that price could possibly act the same way that it did before.
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