Technical Analysis
Technical analysis is the study of the markets through charting for forecasting future
price trends. The whole purpose of charting the price action of a market is to identify trends in their early
stages and trading in the direction of those trends. Technical analysis with charts is a skill that can only
improve with experience and study.
The forex market is a very technical market. Technicals use past price
movements,or price action, to predict future price movements. News, or fundamentals, are believed by some
traders to be built into price action, although they can be the catalyst for the technicals such as breakouts
or pullbacks. While forex is a very technical market, it is worthwhile to add fundamental analysis into the
equation to form a robust trading strategy for the currencies.
When using technical analysis, aim to use at least 6 of these tools in any trading session:
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Time of Day (Timing)
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Different Time-Frame (look for the big picture in higher TFs, entry in the lower TF)
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Moving Averages (EMA / SMA / DMA)
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Pivots
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Support/Resistance
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Trendlines
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MACD (an oscillator that doesn't have OB/OS boundaries)
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RSI/CCI/STOCH (Any one oscillator that shows OB/OS is sufficient)
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Candles
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Chart Patterns
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Market Sentiment
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Divergence
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COT
The best way to combine technical indicators is to use weekly signals to determine market direction and the
daily signals to fine-tune entry and exit points. Follow daily signal only when it agrees with the weekly
signal (daily-weekly, 4 hour-daily,4 hour-1 hour).
When analysing your chart on the MT platform, consider the main chart as your primary technical tool because
this is where price action lies, and where you can draw its important derivative, the support and resistance
levels. Whatever technical analysis indicator you add at the bottom of the chart is your secondary tool, which you
can use to support your decisions based on the main chart.
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