Forex Trading Technical Analysis: An Overview - ForexAbode.com
Market moves because of Fundamental factors, Psychological aspects and sentiments. For short term trading the later two i.e. psychology and sentiments play a big role. Short term trading is not just the fundamental analysis but the analysis of how various trading floors are thinking and behaving. Technical indicators help us analyzing the market-mood by analyzing how the market is moving. Technical indicators also become very important as the traders on the big trading floors also make their trading decisions based on the same indicators. But then when everyone is following more or less the same technical indicators for trading decisions then everyone should be making money? Well, the indicator would show a different picture if you are using a 30-minute chart or a daily chart. The skills lie in comparing different charts of different periods and then making your analysis.
Technical indicators help us in analyzing the following:
1) Trend of the market: Whether there is an uptrend or downtrend or whether the market is moving sideways or without a trend.
2) If market has a trend then whether the trend is strong and hence offer us the opportunity to enter the market in the direction of its movement? What it means is if there is a uptrend which is strong then we can still buy but if there is an uptrend but it’s getting weaker then the market direction may reverse.
3) If the market is running sideways or in range then at what point we should buy and at what point we should sell or short-sell.
Technical analysis is broken into two main categories, chart patterns/trend lines (visual) and indicators (mathematical).
Forex Trading Technical Analysis: An Overview - ForexAbode.com
