Technical analysis can be conducted in different ways. But the most relevant in the trading ecosystem is by exploiting the information offered by historical price charts.
The tools which are relevant to technical analysis are the technical indicators or oscillators. With these tools, one can find out the patterns which they can comprehend to find the momentum for entering or exiting the current market.
Technical analysis is an important aspect to help traders to identify the patterns in the market.
The charts from a technical analysis tool reports the price movement in candlesticks. You could see the forms of the candlesticks by browsing around through your favorite search engines. In this case, the candlesticks focus on the key points demonstrations.
There are some parts that you need to know when it comes to the candlesticks: green, red, bars, wicks, and the patterns.
The colour of the candlesticks signifies the movement. The candlesticks will turn to green if these move up, and red if the price move down. Meanwhile, the bars showcase the status of the price whether it is opening or closing.
Finally, the wicks show the readers whether the prices are in the highest or lowest. When it comes to the patterns, this page itself does not have enough space to explain it all. Make sure you check on other sources to find out the common 16 candlestick patterns.
There are various indicators which you can use on the charts.
In identifying the price points for entering and exiting the trades, you could use the moving averages, Bollinger bands, as well as Fibonacci retracements. However, the seasonal traders will have their own personal opinions and styles. So, this is still flexible.
Just like in any other practice, you might want to test the strategy before applying in the real financial markets.
The best way to do this is to apply the technical analysis towards the previous movements of the price.
The market analysts refer to this test as “back-testing” based on the previous price movements, the traders and market analysts will be able to notice important information so that they can make new positions with informative decisions. from compare brokers
Posted Using InLeo Alpha