Technical analysis

technical analysis


Is to examine the historical data to predict future price trends.

Most traders prefer to use technical analysis to the price of investment products for "macro grasp." Even the fundamentals trader usually looks at the chart to see if the buying price is right, whether it is a cyclical top at the time of the sale or whether it will enter a volatile sideways market.

Technical analysis is based on several important assumptions:


Fundamental information is all reflected in the price data. Market sentiment, differences in views and other fundamental information without further analysis.

History repeats itself, and there is a law to follow. The form of a price change is called a signal. The goal of technical analysis is to discover the current market signals by examining historical market signals.

There are trends in price changes. Technical analysts believe that price volatility is not random or unpredictable. The rise, fall or volatility trend, once formed, will normally last for a period of time.

Learn to "timely" access


Traders often look for ideal entry and exit opportunities based on price charts, volumetric charts and mathematical representations of other market data (ie, technical analysis). Some of these methods are used to identify trends, while others determine the strength and length of a trend.

Use of technical analysis will allow you to trade more rigorous, and reduce the impulse. To suppress the fundamental impulse and insist on the plan into and out of the market may be more difficult. While no system is perfect, technical analysis can help you look at the trading plan more objectively and calmly.

The type of price chart


It is a basic chart that reflects price behavior. Each column represents a period of time - a minimum of 1 minute, a maximum of several years. As time goes on, the histogram reflects the different price patterns.

Candle drawing
Unlike a simple histogram, each candlestick represents the highest, lowest, open and close prices for a period of time. The candle chart gives us more visual information.

Dotted line diagram
The dotted line graph is similar to a histogram, except that multiple X and O are used to indicate changes in the price trend. The dotted line graph has nothing to do with time, only emphasizing price changes.

The type of technical indicators


Trend indicators
The trend indicator will smooth the price data, which makes it easier to identify a continuous rise, fall or sideways consolidation trend. (Eg moving averages, trend lines)

Strength index
Intensity indicators reflect the strength of the market view that is mapped by a given price by taking into account the position of participants in different markets. Trading volume or position interest is the most basic component of the strength indicator.

Fluctuation index
"Volatility" refers to the size of daily price fluctuations (regardless of direction). Fluctuation changes can often predict changes in prices. (Eg Polychrome)

Cycle index
Cycling Indicator Refers to the form of a repeat market that occurs as a result of a cyclical event such as a season or election. It determines the formation of a market form of time. (Eg Elliott Wave Theory)

Support level, resistance level
Support levels and resistance levels mark those markets that repeat the ups and downs and then reverse the price. This phenomenon is attributed to the basic supply and demand situation. (For example, trend lines)

Momentum indicator
It is a measure of the extent to which a trend changes over time. Momentum at the beginning of the trend to reach the peak, the trend changes to a minimum.

When the price and momentum indicators deviate from, indicating a weak trend. If prices go to the extreme, and the momentum is weak, it means that this trend is nearing completion. If the momentum indicator shows a strong trend and price stability, it means that the price trend may change. (Eg Stochastic, MACD, RSI)

Common Technical Index and Application


If the price chart to help traders insight into the available market trends, then the technical indicators can help us determine the strength and durability of the trend.

Even if the indicator signals a reversal, it needs to be fully understood. This means that you need to wait for a while to confirm the same signal, or to see if other signals are present. Adequate patience can help you to accurately interpret the signal and timely response.

The type of Moving Averages


A moving average is one of the most commonly used technical indicators. It helps traders identify current trends, determine trends, and discover trends in over-extending reversals. As the name suggests, the short-term price volatility in the form of a curve is generally "averaged" on the chart, thus helping to observe long-term price movements.

A simple moving average is the average of all price averages over a given time period. By the trader to decide whether the highest price, lowest price or closing price, and then add all of these prices and then even into a curve.

Weighted moving average: the recent data given a greater weight. Smoothing the price curve while making the curve more sensitive to recent price movements.

Index moving average: also known as smooth moving average, in another way to increase the weight of the recent price data. It is multiplied by the percentage of the nearest price data by the average price of the previous period.

Find the moving average and time period that is right for you


To find the best moving average line type and time parameters to do the transaction analysis is not easy. Once selected, it will make it easier to spot trends. The process of finding the ideal tool is called curve fitting.

In the first step, the trader typically compares the moving averages of different time parameters on a historical data chart, and then discovers that as time progresses, the different time parameters have different manifestations in reflecting the degree and speed of price changes, For this adjustment, select the line.

Once you have found the right moving average, you can use it as a tool to find the support and resistance levels needed to create long positions and short positions. If the price curve crosses this line, it is usually a reversal signal, for example:

While longer term moving averages make it easier to identify trends, shorter-term moving averages are more sensitive in reflecting trends. This is why many traders view moving averages of different time parameters at the same time. Once the short-term moving average line and the relative long-term moving average line intersection, it may mean that the current trend into the end, indicating that it may be time to lighten up.

Stochastic index (or shock index), used to monitor the trend of endurance and price reversal signal. Values ​​in the range of 0-100, K line and D line from the composition. K line as "fast indicators", more sensitive; D line as a "slow index", the reaction is slower.

In the sideways consolidation market, the Stochastic is losing its potency. Because K, D line intersection is too frequent, can not determine the signal.

Relative Strength Index (RSI)


Such as the random index, the relative strength index of the numerical range is 0-100, it is a measure of price up, down the power of the indicators.

RSI signals will always require confirmation of other indicators. It may remain high for long periods of time, with no signs of reversal. All this means that the market is quite strong or weak, and may continue for some time.

You need to find the appropriate time parameters. The short-term exponential response is very sensitive and gives rise to multiple signals, but not all signals are persistent; relatively long-term exponents are less volatile. You can choose according to their own trading style time parameters: short-term parameters to do with short-term, long-term parameters to do with the long-term.

Price and relative strength index, such as the occurrence of the trend is a departure from the signal reversal. Of course, make sure you have a good grasp of it before proceeding.

Pauli Channel


Polycarbonate channel is used to determine the limit price fluctuations, generally with a moving average of a certain standard deviation of the channel to determine the top and bottom channel. Its inventor John Polyga suggested that:

Touch channel high or low does not necessarily mean that the trend will be reversed. Polycarbonate channels vary drastically with trading volume, so touching the channel simply means that price changes are dramatic. Additional indicators are required to confirm the strength of the trend.

Fibonacci Retracements


The Fibonacci callback was a series invented by the famous 12th century mathematician Leonardo Fibonacci. These figures reflect the circulatory laws of the natural world, and technocrats use them to find the retracement point for prices.

In a clear upward trend, the downward trend, prices tend to substantially or across the board "retracement." At this point, the support and resistance are usually just above or near the Fibonacci retracement. For forex trading, it means that the callback is usually 23.6%, 38.2%, 50%, or 61.8% of the previous trend.

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