Technical Analysis Tips in forex trading.
Technical observation in forex trading is learning about the effects of price mobility patterns that have occurred. This analysis is to estimate the direction of the next price mobility. A technicalist tends to ignore the reasons or causes of price mobility. They only focus on the consequences of the recent mobility. They need more technical indicators to help their observations.
There are 3 principles that underlie technical observations in forex trading, namely:
1. All causes of price mobility.
Factors influencing the release of economic data, changing political conditions, market sentiment and also changes in the number of requests and offers. In estimating the direction of the market, a true forex trader must have a certain focus. They must focus on the current pattern of price mobility and changes in technical indicators, not on what will happen due to certain news releases.
2. Market prices always move to follow trends with certain limits.
One important goal of technical analysis is to determine the direction of future price mobility trends. Establish direction of price trends in the short, medium and long term. There are 3 states of trend direction, namely the direction of price mobility that will tend to remain. Second, the direction of mobility tends to reverse. And third is mobility which tends to move back and forth in a certain price range.
Before using certain technical indicators to understand the direction of the trend, chartists should measure prices with lines. The drawn line connects the lowest prices or the highest prices. In addition, the price mobility trend will continue or reverse if it has touched, or passed (penetrated) certain price limits. This is called support and resistance levels. Likewise, if prices move sideways, a break in the levels of support or resistance implies a trending situation.
To understand these price limits, technicalist draw the lines of support and resistance that are believed to be price levels. Apart from price levels, it is also the consensus of market participants. Levels of support and resistance, these limits are also psychological numbers. Or it could be a round number that is often used as a reference for market participants.
3. The history of the pattern.
Chartist believes that the pattern of price mobility in the past will recur and could happen again at this time. The more often a chart pattern occurs, the greater the probability of the truth. The pattern of price mobility can also be a candlestick bar formation with various variations.