Archive for the ‘Technical Analysis’ Category

Technical Analysis Introduction

Saturday, October 8th, 2011

Technical analysis is use for a long time in the traditional financial markets, such as the stock market. The principle of technical analysis is that history repeats itself. Technical analysis methods are based on the price movement history to be used for a prediction of future price movement. There are numerous methods used for price prediction, but the basic idea is that it is based on past price evolution. Technical analysis has different forms and many methods of use.

One method of technical analysis is to use technical indicators. A technical indicator is a graphic representation of price evolution, and it is generally place in the lower part of the chart. An example of a technical indicator is MACD, or RSI.

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Universal Mathematical Models – Mathematical Indicators

Saturday, July 16th, 2011

The base line for this mathematical models is to incorporate a theory that will generate automatic signals for when to buy and when to sell currency pair, and also should serve as a confirmation before opening a trade.

1. Moving Average

The first move should be to place one or two moving averages over the spot price. It is better to avoid adding more then 3 moving averages over one chart. The more indicators you have on one chart the more likely your are to miss the movement because they don’t line up to give you a trading signal.

These moving averages can be either a simple moving average or an exponential moving average (these are used more common). If you are using a weighted moving average the line will be much closer to the spot price because it gives a higher importance to the last prices.

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Five ways how technical analysis can fail

Tuesday, April 26th, 2011

Technical analysis is truly unique. In less then 1 second the trader can see a very significant quantity of information related to price movement of one currency. The lines of moving average can show you the trend. Candlesticks show you the correlation between the opening price and the closing price. Bollinger bands gives you price target and shows you the volatility level of a currency pair. Oscillators like MACD offer entry point signals and exit point signlas. All this informations are provided instantly, but technical analysis is not necessarily the best invention ever.

Bellow are shown 5 ways in which technical analysis shows it’s imperfection. This unpredictable events can cause currency pairs to move unpredictable for a couple of hours or a couple of days, in some cases even for a few months.

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Trend Analysis

Wednesday, April 20th, 2011

Understanding Trend Analysis

Bellow are a few methods that you can use to analyse the trends and how you can use them on charts.

~What are trends and different types of trends

~Who to draw a trend line

~Trend movements and trend channels

~Support and resistance levels of trends and how to identify them

1. Trends

The trends are use to determine the relative direction of a price in the market. There are 3 types of trends: bullish trends (upward trend), bearish trend (downward trend), sideways trend (neutral trend). Without a trend the prices stay flat and unchanged. For the trades to be profitable there must be a movement in price value, or there must be a trend. The forex market, a market with a lot of trends, has a lot of explosive price movement in a short period of time, which can create significant income opportunity. There is a saying: “The trend is your friend“, never forget this when you are tranding.

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Posted in Technical Analysis |