Let's start with the assumption underlying the technical analysis. In this case I would take an extreme approach so that you can understand how a technical analysis used in obtaining the gain in forex trading. Of course in practice it is not so. You can combine both analysis (fundamental and technical) in order to obtain a trading system that is best for you.
The chartist (parties who perform technical analysis), believe that they can figure out the patterns of price movements in the future with rates based on the observations of the movement of the exchange rate in the past. In short they hold these words: "History always repeats it self." This philosophy is of course contrary to the fundamentalists in which investment decisions over the value of a currency is based on the fundamental factors for economic, political and monetary is concerned.
The main weapon of the technical analyst is a graph (chart – that's why they called the chartist). Through this chart they can see the ongoing trend, a span of trend, the volume of transactions and the levels of psychological existence. If you have been able to figure out these 4 things, of course huge profits soon will pay You to gushing. Let me repeat:
1. Trend in progress
2. transaction Volume
3. the levels of the psychological (support and resistance)
4. the period of time that happens.
Yup, that's it. Indeed the purpose of the chartist is predicted to four of these things. But now the question is how accurate our ability to predict the price? Well that's what it should be constantly in exercise every day. There is no one perfect method of either technical or fundamental. Experience and self holds the central role here.
Technical analysis itself has some basic or analysis section is different. Technical analysis is generally divided into several major branches, namely:
What is technical analysis have drawbacks?? Of course. As I said just now, no one is perfect. Let us look at the second weakness of this analysis:
1. Weaknesses in Fundamental analysis
- It takes time togain information.
- Oftenbesubjectivebecause it involvesa lot ofpeople's opinion.
- Better fitapplied tolong termtradingperiod.
- Difficult toapply toinefficientmarkets.
2. weakness in technical analysis
- Requires a lot of data to support the prediction akuratnya.
- Relies heavily on the ability of the chartist. Each has a different method of chartist and each had a match applied to each other.
Well that's it for the introduction of the technical analysis. In the next section we just became acquainted with graphic. Surely you don't want too much information that eventually even makes you dizzy isn't it?
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