Forex Learning
Forex Learning to read charts and pop your benefits
The first step in the technical analysis is to learn to read the letters. Here are some basic lessons to guide your early attempts.
The first time that the analysis of a currency pair, look for the prevailing trend. Start with the charts long-term (monthly, weekly and daily), which goes back several years. Because these letters contain a greater amount of data that provide a clearer picture of what the currency pair is making the charts short-term (hours, half an hour, 15 minutes, or 5 minutes). The extra data makes the indicators of what you are saying more reliable.
Identify the trend is simple: just look at the table and decide if the graph goes up than down, or more down than up. Trends can be steep or shallow or short weeks long years. Practice identifying them, and find the points at which to change direction. The longer term trend is the strongest, which is another reason for looking at the first letters.
Even if you are scalping or day trading and have no intention to occupy a position more than an hour, you'll do better business in the same direction as the prevailing trend. So take the time to identify at least on the daily charts before you begin. There is an old merchant who says: "The trend is your friend." It is a lie.
Once you have identified the trend charts in the long term, compared to what is seen in the short term charts. You will find that there can be any number of medium-term trends and short term in the footsteps of the prevailing trend. Figure depart from the top down, but generally follows the path traced by the longer-term trend.
Next, find support and resistance levels, which are the "floor" and "ceiling" points on the graph, respectively. These key points in the letter that the price repeatedly refuses to break through, or simply gives peeks through the fight. The price is going to be so high or so low but not beyond, it reaches that point then changes direction. The more times that happens, the stronger the support and resistance are.
Draw a straight line, either in mind or on the chart, passing through most of the points of support. Then draw another passing through the points of resistance. This gives an image of the trajectory of the trend of the currency pair's next, called the price channel, and is a simple but powerful tool to help determine how that Road will continue.
When the support and resistance are strong, the chart of the currency pair seems to bounce along sideways between these two lines like a pinball. When this happens, the currency pair is said to be limited range. When this happens 80% of the time, many people simply trade within channels, although this technique can not provide any benefit.
These lines do not have to be level. Sometimes the currency pair is trending up or down, but still moving within that channel. However, it is inclined, you can still operate within that range.
When a currency pair escapes to a channel Price, sometimes falls back into the canal, and sometimes movement gains momentum and continues. The latter is called a market movement and the other way to trade the range: setting an entry order for the price break, either above or below the channel, then sit back and let you travel.
Congratulations, now I understand most important elements of basic technical analysis!
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