Technical Analysis of Forex
Technical analysis in Forex describes an analytical approach to techniques and principles of market anticipation. There are two types of approach in technical Analysis: chartism (Analysis of charts in English charts) and “Mathematical” analysis, which refers to indicators.
Chartism as a technical or graphical analysis
Chartism is to study the graphs by trying to see strategies emerge by tracing examples of the rights (supports, resistances, trend lines…) that would bring out a background trend by identifying double bottom, double top, Diamond, bevel, triangles, flags, pennants, bull or bear gaps, horizontal channels or even inverted shoulder head…
Chartist analysis is at the base as a fundamental principle of technical analysis.
Why use Chartism?
First, because once all the different Chartist configurations learned, it becomes obvious to the trader to anticipate some reversal of trends. In addition, the chartism is detached from many other trading techniques simply because of its simplicity.
All the possible indicators themselves make the Chartist analysis. By dint of crossing too many price data, some of them end up giving contradictory information. Chartism is still the good old school of trading.
A plethora of stock market experts and high-level traders keep repeating that
All the information useful to the decision making is in the price.
Trading signals and technical analysis indicators
The technical indicators of forex trading (such as the MACD) are designed to mathematically compile the courses. This, trying to extract information and trading signals exploitable by the trader. They are supposed to find moments of purchase or sale.
The indicators are still to be taken with some hindsight for the Forex trader. In fact, without experience in situations, they may interpret false signals as being exploitable for a winning trade on the market.