One who decided to be a Forex trader need to be concerned with charting in order to invest in a good price. It is important to be extensively involved with the latest techniques in order to have a solid knowledge of when to invest in a security. The chart technique basically allows a good prediction to discover a corresponding course for themselves. Beginners use different brokers to get a good start into the charting technique. After all, a little background knowledge must be available, how to deal with the chart s and what signals must be respected.
The technical analysis
The technical analysis is an integral part of the financial markets. Since the beginning of the twentieth century, investors have tried to capture particular ratios of values and thus to ensure that good entry opportunities for trading are found. Extensive studies are used to clarify fundamental key figures of a market or a company and to use these for forecasts. Price progressions are statistics that lead to clear signals using the indicator analysis. The basic assumption of the charting technique is that the past price trajectories of the past are repeated. Professional traders have noted points in charts, which must be kept as special instructions in mind. Important methods in the charting technique must be taken into account in order to be able to continue to value the course. Especially the following point should never be forgotten.
The trend is your friend
The basic rule for the charting technique and the analysis of the technical data is the saying “The trend is your friend” . This proverb is used permanently in chart analysis to make it clear that you should not oppose a trend. Striking movements should not be strengthened in their opposition, as the same trend direction is usually maintained. If a stronger movement should be the case, it is a turning point, which is signaled prematurely. Different extreme points are marked in an analysis in order to recognize significant changes early on. If there is a series of trends with many highs, a downtrend can be detected. But alsoSideways trends are present when a course is on the same summit for a long time, making only light swinging movements. A straight line can then be introduced to the charts, which gives a clear indication of a sideways trend. Basically, charts can run in three directions:
These movements can be detected in the chart analysis with different tools. Mostly the Bollinger Bands used to ensure high, medium and low stock price marking. It is important that the different trends are clearly defined, thus ensuring that the trend has a longer validity. A trend is then present until it breaks through the price charts and can be seen below or above the curve. It is important that the outbreak only happens after use. Here it is sufficient that the course is noted once a day in order to detect possible changes. According to experts, the last markings should be carried out after the closing price. Other experts see a trend as completed only when the price is up to three percent below or above the trend line that has existed so far.
Highs and lows
When analyzing the current prices, the high and low points are usually considered a bit closer to define trend lines. When it comes to securing and fixing price targets for a stock, the highest and lowest points can be used as a good guideline. If a chart assumes a downward movement, then a low should be detected, which develops from the point upwards. The low usually uses a support. Courses can rotate frequently and develop against a trend line.Once the price has changed, it usually will not change again. Support in this context is stronger the more it has served as a turning point. This can be recognized directly, if the past of the current values continues to be looked at. In addition, the price history is often repeated, which is why chart analysis experts would like to look at the past history of the course to make forecasts. The analysis should not only look at the values of a course from the last hour, but it is also important to look at the values of the past few days. Depending on the forecast period, the last period should be considered closer to use similar values as support.
The specialist uses resistance as an important factor in the analysis of a chart, which can help in the analysis. For this purpose, a resistance line is drawn, which is used as an obstacle within an upward movement. In a long-term chart, a breakthrough can be well recognized . For future charts, it will usually be hard to skip a certain area permanently. However, if the break of the resistance line can happen, the drawn directive can be used as a support line. This swap is a secure methodology for chart analysis. It should be noted here:
• Like previous support, the uptrend line can turn into a resistance when it has broken down
• Resistance lines and downtrend lines serve as support for the course after a breakthrough
When is a trend over?
Most traders do not just need to know when a trend starts, but when it stops. It will be asked what indicators for this findingmust be used. Some formations that can be recognized in a chart confirm a trend reversal. This includes the V formation. This term comes because of the sudden potential trend reversal, which can lead to a rapid downward or upward movement. Countermovements seem to look like a V quickly, which is the case in a fast rise. On a descent or fall of the course an A-formation can be seen. Of course, for the trend change, a reliable use of important indicators should be used to quickly detect a possible reversal. In practice, the constellation in this formation is relatively common, so shareholders should be more concerned with the specificity of the formation.
The double bottom
The double bottom is an indication that the formation, which can also be considered the letter W, can be seen in the downtrend. Investors will recognize by the scheme that it is a rising pricewhen the W formation has been completed. The double bottom denotes the double top, where there are two lows, a short rising rebound and another low point. The course floor is not extremely blasted, but the ground is stable and remains in the almost identical values. After the medium recovery has taken place, again a decrease can be detected, which is then associated with a sudden slope. This formation is relatively common, but most will be seen in monthly views, not on individual days.