Technical analysis is the study and dissection of price fluctuation and trading volumes, reports and graphs are submitted in order to predict future market flux. It's worth mentioning that technical analysis is not based on causes that lead to market activity (like fundamental analysis) but market technical analysis relies on the study of price fluxes and the anticipation of future movements.
Technical analysis of the market depends on three important foundations.
Market moves in trends:
As we know the market tends to be in directional movement, this means that when the market trend (ascents or descents) for a certain period, it is possible to continue this trend for a relatively long period of time before being reversed, which gives traders easy identification of current market orientation to activate contracts.
HISTORY REPEATS ITSELF:
We know that traders are human beings with feelings, often trader’s decisions depend on feelings of greed in obtaining greater profits or fear of loss, all these feelings translate on the charts in several forms and in several recognizable ratings, as these sentiments repeat over time, it is possible to predict graph movements and therefore anticipate future motions.
Price movement is the essence:
This principle relies on the study of price flux; it is essentially a summary of global economic proceedings. Through monitoring the price movements, traders determine commerce exchange amounts in trade over a particular time period which is hard to predict just by following the news on the political and economic values of assets alone.
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