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Technical Analysis
Technical analysis implies forecasting future changes in exchange rates by studying past and current state of the market. With data on how quotes changed in the past, the investor tries to interpret the signals from the market about future price changes.
Various types of technical analysis are enjoyed by every trader. Even the fundamental analysis zealots use price charts before opening or closing a position, as it helps them to determine the best moment to enter and exit the market. Charts show how prices moved in the past, thus representing a market condition, and thanks to that, investors can determine the most favorable point of making a purchase or sale more easily.
Supporters of technical analysis do not ignore fundamental news, though it may seem so at first glance. Successful traders usually combine technical and fundamental analysis. They claim that all the fundamental data is reflected in the price, since the prices have already been “filled” with all the fundamental information and created a graphical model that allows the prediction of future prices.
The basis of technical analysis is made up of the following statements:
- All is accounted in the price: any information is reflected in market price and directly or indirectly affects the change.
- Prices move in trends: the movement of prices is not accidental, it is predictable.
- History repeats itself: the same information reflected in prices of different periods repeats its movements in the future.
