The leading Social Trading platform with 4. An efficient, secure deposit and withdrawal experience. ATFX welcomes Scalpers, Hedging, Analyze tehnice forex trading Advisers and more. Instead, it focuses on the movement from support floors to resistance.
In a series of 255 articles, he propounded a number of separate ideas that were later brought together to form the theory. That all knowledge required for trading should be accounted for by the price is the fundamental tenet of technical analysis. Price is, after all, determined by the combined knowledge of all market participants, and therefore should reflect all information. In the view of technical traders, price movements are not random. When the price of a currency pair changes, it does so because of the psychology of those who trade.
There may be a good, fundamental reason for a price change, but that is not important in the sense that it is the minds of the traders, not the reason, that determine what happens on a market. JPY may fall 100 pips in price, then stop falling. For the technical trader, the observation is simply that the pair has hit its support floor. In other words, for whatever reason, traders have decided that this is the right price for this pair at this time.
All that they are concerned with is the constatation that there is resistance at this level, after a movement lower. Don’t ask me what the euro is doing. It is subject to endless speculation. It is better to simply ignore all the possible reasons why. By focusing on price and only price, technical analysis represents a direct approach. Instead, the technical trader considers the factors in supply and demand for a given currency. Certainly this simplifies the focus of the technical trader enormously: The technical trader looks at nothing but the charts.
Is it possible to identify a trend? Essential to the reading of charts is the understanding of candlesticks. Candlesticks are symbolic representations are trading periods. The candlestick is a thin vertical line showing the period’s trading range.
You can see that there is a considerable wealth of information provided by a candlestick. With the candlesticks, one begins by seeking chart patterns. Some chart patterns provide a very high probability of predicable behavior. For example, the Symmetrical Triangle pattern is a very sure sign of reliable action.
It can be recognised easily when you see a currency pair’s price moving up and down in ever-smaller amounts, and so converging towards a single point. Its back and forth oscillations will become smaller and smaller until the pair reaches a critical price, breaks out of the pattern, and moves drastically up or down. Once the pattern is broken, investors quickly move into action, pushing the stock price higher or lower. This is used frequently when traders short a given currency pair, to take profit from movement lower. It is signalled by three peaks, one after the other. The first trough is a signal that buying demand is starting to weaken. Traders who believe the currency pair is undervalued respond with a buying pressure, followed by a flood of selling when traders fear the pair has run too high.