Technical Analysis is the set of Fx trading tools that you will fire up with you ForEx trading platform just after you’ve finished your Fundamental Analysis.
Technical Analysis will greatly assist you in making your trading decisions but common newbie mistake is believing Fx Technical Analysis can predict future. ForEx is the largest market in the world with more than 6 trillion USD traded every day. That much volume simply can not be controlled. No one can know what will happen next.
Fx Technical Analysis will help us analyse previous currency pair price movements on the market in order to understand current market situation and to make good and profitable decisions in the future.
Simply put, it is a part of your Fx trading strategy that will help you decide when to open position, for how long to keep it open and when to close the position with profit.
ForEx Technical Analysis Tools
Main ForEx Technical Analysis tools you will be using are:
- Support and Resistance Lines
- Technical Indicators
- Japanese Candlesticks
- Different Fx Trading Platform Time Frames
Once again, important is to understand that Fx Technical Analysis is not saying anything about the future, but about current market situation. It will help you understand current balance on the market and to identify high-probability setups and open profitable positions.
Usual mistake newbies make with this many Fx Trading tools at their disposal is to overcrowd their Fx Trading platform with lines, indicators, Fibonacci Retracements. They end up confused with all the signals. You want to keep your Fx Technical Analysis as simple as possible.
With “as simple as possible” I mean to keep your focus on the price. The best practice is to look for your setups and setup confirmations in Japanese Candlesticks. Never ever use more than one Fx Technical Indicator for the same thing. Many Fx Technical Analysis tools do exactly the same thing and you should pick a tool that best fits your trading strategy. Every Technical Indicator has default set of parameters and experimenting with those will adjust the Indicator better to your trading needs.
Another important thing when talking about Fx Technical Analysis is that Fx market is not perfect. If I was told to find ideal Head and Shoulders Japanese Candlestick Pattern I think I would still be looking for it. Sometimes waiting for the perfect setup will make you miss your trading opportunity completely or to cut your profits short. So, with this less-than-perfect market setups, how should you be able to recognize, for example, the Reversal Japanese Candlestick Pattern when you see it? With P-R-A-C-T-I-C-E. Practice, practice, practice.
Next word of advice with Fx Technical Analysis, and this should apply to all your Fx Trading is to never look at things out of the concept.
What this means? Okay, you have learned your Japanese Candlesticks and you spot a hammer candle and open the position expecting the reversal of the current market. But nothing happened. Price continued the same way, your stop loss got activated and your position is history. What happened?
There was not much price action and market had very low volatility. In low volatility markets hammers are not considered to be strong reversal signal. Same, spotting a Double Top Candlestick Pattern at beginning of the trend will not mean reversal of that trend.
So how will your Fx Technical Analysis look like?
You will draw your Trend Lines, Support and Resistance lines, keeping in mind higher time frames. You will fire-up your Trend Indicators, Oscillators and Volatility Indicators. You will look for your Japanese Candlestick Patterns that will give you your entry signals.
Simple and easy ForEx Technical Analysis, right? This might sound complicated at the moment but it will get lot easier with practice. Fx Technical Analysis will help you minimize your losses when losing and maximize your winnings when winning.
ForEx Technical Analysis Explained PDF Download
Use this Technical Analysis Explained PDF file to better understand ForEx Technical Analysis and all that is included in it. Feel free to download and share Technical Analysis PDF file.