TAILIEUCHUNG - Forex On-Line Manual For Successful Trading Chapter 5

CHAPTER 5 Technical Analysis . The Fundamentals Of Technical Analysis. Technical analysis is appointed to analyze market movement (the movement of prices, volumes and open interests) using the information obtained for a past time. | CHAPTER 5 Technical Analysis . The Fundamentals Of Technical Analysis Technical analysis is appointed to analyze market movement the movement of prices volumes and open interests using the information obtained for a past time. Mainly it is the chart study of past behavior of currencies prices in order to forecast their future performance. It is one of the most significant tools available for the forecasting of financial markets. Such analysis has been an increasingly utilized forecasting tool over the last two centuries. The main strength of technical analysis is the flexibility with regard to the underlying instrument regarding the markets and regarding the time frame. A trader who deals several currencies but specializes in one may easily apply the same technical expertise to trading another currency. A trader who specializes in spot trading can make a smooth transition to dealing currency futures by using chart studies because the same technical principles apply over and over again regardless of the market. Finally different players have different trading styles objectives and time frames. Technical analysis is easy to compute what is important while the technical services are becoming increasingly sophisticated and reasonably priced. Prior to this historic open market intervention technical analysis provided ample selling signals. Price The Fundamental Principles of Technical Analysis are based on the Dow Theory with the following main thesis 1. The price is a comprehensive reflection of all the market forces. At any given time all market information and forces are reflected in the currency prices. 2. Price movements are historically repetitive. 3. Price movements are trend followers. FOREX. On-line Manual For Successful Trading 45 4. The market has three trends primary secondary and minor. The primary trend has three phases accumulation run-up run-down and distribution. In the accumulation phase the shrewdest traders enter new positions. In the run-up .

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