Technical analysis of the foreign exchange market in real time: fundamentals and tools

The technical analysis of the foreign exchange market in real time is one of the most effective ways of market research. It is a forecasting of the movement of the price of an asset on the basis of an analysis of past movements. The technique allows you to track fluctuations in the exchange rate in the past and, taking into account the data obtained, determine where the chart will go - to the north or to the south. The peculiarity of technology lies in the fact that the price is investigated solely on the basis of its movement. Complex technical analysis of the currency market does not include an assessment of the fundamental factors that could cause the movement of quotations in a certain direction.

Basics of technical analysis

As a basis for technical analysis is a tandem of interrelated activities, which allow to determine with the greatest accuracy the subsequent trend movement. The use of one instrument within the framework of technology, in particular one of the indicators or only lines of support and resistance, is not effective. Comparing data on several instruments allows you to make the most accurate forecast. The market situation is evaluated on the basis of several parameters, such as the change in value, the volume of transactions, the number of open positions. The dominant parameter for assessing the movement of the market is always the price, the remaining considered values only supplement the picture, confirm the forecast.

Basic principles of analysis

The technical analysis of the real-time currency market is based on three main principles that should be known not only to a professional but also to a novice trader:

• The foreign exchange market in its movement takes into account absolutely everything. The price chart reflects political and economic factors. For example, the lifting of EU sanctions from Iran to supply oil to the international market or the payment of Greece's EU debts can be attributed to the most powerful stimulants of currency movements.
• Trends are systematically repeated. From time to time the price will draw identical figures, which are called patterns. This is due to the fact that, despite the changing situation in the world, the psychological factor never changes, and traders in most cases use patterns of behavior in the market. To say more, traders are accustomed to react to certain news the same way. Knowing the reactions of market participants, you can open and close positions in a timely manner.
• At the heart of any movement is the trend. Technical analysis of the foreign exchange market in real time is simply impossible without determining the main trend in the market. If there were chaos in its framework, no forecasting, let alone profit, due to speculation in prices, there could be no question.

Basic concepts in technology

Technical analysis of the currency market in real time is based on the basic concepts. You can not start an analysis of the situation if you do not understand the trends. There are three formats of market movement:

• Bull tendency (or uptrend) - the price goes up.
• A downward trend (or a bearish trend) - the price is directed downwards.
• The lateral trend (or flat) is a period of stagnation in the market, a moment of uncertainty. The price moves in a narrow price corridor, and market participants only think about the direction in which to open positions to them.

Let's pay attention to the fact that each of the trends in its pure form is a rarity in the market. Any movement of quotations is accompanied by kickbacks. Beginners are advised to trade only with pronounced trends. Even the professionals are afraid of the flat market conditions, since probable profits are not justified by high risks.

Technical Analysis Tools

Technical analysis tools can be:

• Graphics bars;
• Indicators;
• Oscillators;
• Channels;
• Wave;
• Graphic figures.

Each of the tools has certain advantages. A detailed understanding of each functional will allow us to analyze the situation and make the right decision. It is not necessary to be guided only by one instrument, since its signal for the transaction can be false. Another thing is when several instruments simultaneously show identical signals, which opens up wide prospects for earning. Previously, technical analysis tools were not automated, as it is today. In order to analyze the situation, it was necessary to draw charts and perform calculations. So studying each instrument is not so difficult, but extremely necessary.

Figures of technical analysis - the most reliable patterns

Within the framework of technical analysis, there are established patterns that are defined by patterns of behavior of both large market participants and small ones. They are personified in the format of certain graphic figures. An example is the flag and double top, triple bottom and head - shoulders. As soon as the figure looms on the chart, and the price passes a certain line, you can confidently talk about the further direction of the movement.

What are the figures talking about and why are they needed?

Let's note that there are figures of continuation of a trend and a trend reversal. The frequency of appearance of such patterns on the chart is different depending on the time interval and the traded instrument (currency pair). The percentage of working off such patterns can be from 80% or more. It is not enough to understand the theory. Technical analysis of the online currency market on the basis of graphic figures should be accompanied by practice. Only by trading for a long time, you can learn to see patterns and use them to your advantage. In practice, any figures will not have such a clear and concise appearance, as in the pictures.

Benefits of technology

Technical analysis of the Forex currency market is the basis of the basics, with which each novice acquaintance with the currency market begins. Experienced players use technology as a tool for analyzing the behavior of newcomers. Thus, inexperienced traders often make decisions, based only on the emerging lines of support and resistance. Knowing this, large players can anticipate the direction of movement due to the mass character of the solution, which allows them to occupy the most profitable positions. Not for nothing there are statistics, according to which only a few percent of participants earn on the currency market. There is even a theory that, acting in defiance of the signals of technology, you can earn a solid income, but many will take up this issue to challenge.

Understanding technical analysis is a step towards successful trading

Fundamentals of technical analysis of the currency market, although they are basic, but can not be the only tool for building their trading strategy. Effective trade happens only when, in addition to technology, fundamental analysis and computer analysis are used. Do not use all the tools of technology at the same time, as this will only overload the schedule and lead to confusion in the signals. Experts recommend newcomers to study in detail one instrument in each of the types of market analysis, depending on the most acceptable format of trade. This approach will avoid losses and losses, will bring good results of trade.