Forex
Trading - Easy Steps to Perform Technical Analysis
Technical
analysis forex is not as
complicated as it looks. Take a look at these pictures and tell me where the
direction of price movement in general. Up or down?
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| Technical Analysis Forex |
Is your answer down? Yup, it’s absolutely
right and you just did technical analysis forex. See? It’s not hard.
What you just did is a basic application of
technical analysis, which determines the direction or TREND. You already have a
strong enough foundation to be able to
do more sophisticated technical analysis. What do you need? One of the most
important is: PATIENCE and the right learning resources. Now push yourself to
enjoy these five simple steps for technical analysis forex :
1. Open the chart and identify ongoing trends
The first step you need to do of course is to
open a chart, and then see the ongoing trend. You can choose, a trend which you
want to participate and benefit. Recognize the ongoing trend, ranging from
long-term trend, then retreat to the medium-term trend or a short-term.Although you may choose a trend which will be
utilized, it is advisable to seek long-term trend (major trend) and follow it.
Remember, "the trend is your
friend".
If you have to recognize its trend, then the
best strategy for you is to take a position (transaction) in line with the
ongoing trend. If the current trend is up (uptrend), then you should look for
opportunities to "buy". Conversely, if its trend is down (downtrend),
then look for opportunities "sell".
2. Determine the support and resistance
Once you can recognize the ongoing trend, the
next step is to determine where support and resistance levels. You can look for
opportunities to "buy" in the area of support or "sell"
in the area of resistance. Of course you have to remember the first step
above, which is taking the position that the direction of the trend.
In other words, if you look at the current
trend is an uptrend, then seek the position of "buy" in the support
area, and vice versa.
3. Take advantage of Moving Average
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| Technical Analysis Forex |
You can also use moving averages (MA) to
identify trends. If it is difficult to draw a trendline, you can see the
movement of the MA to help you identify the trend. Simply put, if you look at
the MA moves down and the price moves below the MA, so the current trend is a
downtrend. Conversely, if you look at the MA moves up and the price moves above
the MA, so the current trend is an uptrend.
4. Filter with indicator oscillator
Oscillator indicator can give an idea of
whether the market was in an overbought (overbought) or oversold (oversold).
Overbought condition means the state when prices are considered high enough at
the time. This condition is often accompanied by a decline in prices. Instead,
the oversold condition means that the price is now very low at the time, and is
often followed by rising prices.
When the oscillator indicator has been
showing overbought indication, then you need to do is to wait for a
confirmation signal to sell. Conversely, if the oscillator is showing oversold
indication, wait for confirmation of a buy signal.
5. Set the stop loss and profit target
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| Technical Analysis Forex |
The last step, determine the level of stop
loss and profit target of transaction you make. In determining the stop loss
and profit target, you must not forget the rules of risk-reward-ratio, where
stop loss (risk of loss) should not be greater than the target profit. This
rule should not be violated.
You also need to determine how much the
volume of your transaction. Customize with your trading plan, so that if you
lose, the risk that you receive do not exceed your risk tolerance.
Technical Analysis Forex is quite easy to learn, keep practicing and see the result!
Keep subscribing to our blog, and have a
pleasant business everyone!
