Technical analysis

by Evgenia Gencheva Sun Sep 04, 2016 11:26 am

Technical analysis answers the essential questions the exact levels at which market prices are changed and the time when this will happen, something that is impossible to predict with accuracy of fundamental analysis. Financial markets are fast-moving and highly variable for a short time and can not be defined by static concepts and linear dependencies. Fundamental indicators give the general predictions which can be judged on current market trends. While technical analysis accepts the dynamic structure of the market, it does not take into account the fundamental values because it accepts that they are included in the price, have them on the graph. Due to the special nature of financial markets, which tend to anticipate future price changes always precede changes in fundamental conditions.

Claims of technical analysis is based on the fact that in reality it is possible to predict the future functioning of a market entirely by observations on the current and past state of the market, without the need to include other external factors in the analysis. Sure Forex traders should not forget that while technical analysis is universal, Forex each currency pair has its own peculiarities.

In technical analysis there are three basic principles:

1. The market absorbs everything, the whole foundation and the price is a result and reflection of the driving forces in the market.

2. Movement of prices is governed by developments / trends / at any time alternating periods of rise and fall of prices, and in between there is a dominant main trend, which is valid until the turn of the market.

3. "History repeats itself, the key to understanding the future lies in studying the past." The fact that certain graphics configurations prices tend to repeat sustainable and reusable in different markets at different times is a result of the manifestation of certain behavioral patterns of human nature.