There is no right or wrong way to generate income in Forex trading. You can use any method, any tactics until the optimal result is achieved. Price fluctuations occur on Forex constantly and there is a popular opinion that these changes repeat, which means that they can be predicted. And knowing how to predict prices, you can earn more, which all traders strive for. Different types of analysis are used to predict price changes.
Technical analysis is the study of changes in prices in the foreign exchange market using mathematical methods, charts and indicators that predict changes in the market.
Principle of technical analysis
The method is based on the opinion of repeated price fluctuations and is used to justify a trading strategy. Unlike other types of research, technical analysis is not based on economic calculations, but on mathematical and statistical ones.
The convenience of technical analysis lies in the fact that it can be used both in combination with other types of analysis, and on its own. Price information has a long history and is publicly available, which greatly helps when using technical analysis. Thus, we can say that price history is enough to predict its future changes.
However, it must be remembered that even the most subtle analysis of past transactions cannot guarantee future success.
Types of technical indicators
The main tool of technical analysis is a technical indicator - a graphic image of the mathematical transformation of the price stream.
indicators determining the likely direction of the price. The most popular of them are: SMA, EMA, VMA, WMA. Only work if there is a trend.
indicators that determine the likely pivot point of the price chart. They are used to study excess sales or purchases. They work both with and without a trend. The most popular of them are: RSI, MACD and STOCHASTICS.
ndicators that assess the likely potential movement (change) of the price.
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